Tax Laws Amendment (2007 Measures No. 3) Act 2007 (79 of 2007)

Schedule 8   Forestry managed investment schemes

Part 1   Main amendments

Income Tax Assessment Act 1936

1   After section 82KZMG

Insert:

82KZMGA Deductions for certain forestry expenditure

(1) A taxpayer cannot deduct expenditure in relation to which the requirements in section 82KZMG are met if:

(a) the taxpayer holds the taxpayer’s interest in the agreement mentioned in section 82KZMG as an initial participant in the agreement; and

(b) a CGT event happens in relation to that interest within 4 years after the end of the year of income in which the taxpayer first incurred expenditure under the agreement.

(2) Despite section 170, the Commissioner may amend the taxpayer’s assessment at any time within 2 years after the end of the year of income in which the CGT event happens, for the purpose of giving effect to this section.

82KZMGB CGT event in relation to interest in 82KZMG agreement

(1) This section applies if:

(a) a taxpayer holds an interest in an agreement mentioned in section 82KZMG as an initial participant in the agreement; and

(b) at least one of these conditions is satisfied:

(i) the taxpayer can deduct or has deducted an amount for a year of income in relation to the interest;

(ii) the condition in subparagraph (i) would be satisfied if section 82KZMGA were disregarded; and

(c) subsection 82KZMG(1) applies to the timing of the deduction (or would apply if section 82KZMGA were disregarded); and

(d) a CGT event happens in relation to the interest, other than a CGT event that happens in respect of thinning.

(2) The taxpayer’s assessable income for the year of income in which the CGT event happens includes:

(a) if, as a result of the CGT event, the taxpayer no longer holds the interest - the market value of the interest (worked out as at the time of the event); or

(b) otherwise - the decrease (if any) in the market value of the interest as a result of the CGT event.

(3) Any amount that the taxpayer actually receives because of the CGT event is not included in the taxpayer’s assessable income (nor is it exempt income).