Tax Laws Amendment (2008 Measures No. 2) Act 2008 (38 of 2008)

Schedule 8   Capital expenditure for the establishment of trees in carbon sink forests

Part 2   Income year 2012-13 and later income years

Income Tax Assessment Act 1997

12   Subsections 40-1005(1), (2), (3) and (4)

Repeal the subsections, substitute:

(1) You can deduct an amount for an income year if:

(a) you or another entity incurred capital expenditure that is covered under section 40-1010 in relation to particular trees; and

(b) you satisfy a condition in subsection (5) for the trees for at least part of the income year; and

(c) you are carrying on a *business in the income year; and

(d) you use the land occupied by the trees for the primary and principal purpose of *carbon sequestration by the trees (see section 40-1015); and

(e) your purposes in using the land occupied by the trees do not include any of the following:

(i) felling the trees;

(ii) using the trees for *commercial horticulture; and

(f) you do not use the land in connection with:

(i) a *managed investment scheme; or

(ii) a *forestry managed investment scheme.

(2) The amount of the deduction is worked out under this formula:

(Establishment expenditure * (Write-off days in income year / 365) * write-off rate)

where:

establishment expenditure is the amount of expenditure mentioned in subsection (1).

write-off days in income year is the number of days in the income year:

(a) that occur within the period:

(i) starting on the first day of the income year in which the trees are established; and

(ii) ending 14 years and 105 days after that day; and

(b) on which you use the land occupied by the trees for the primary and principal purpose of *carbon sequestration by the trees; and

(c) on which you satisfy a condition in subsection (5) for the trees.

write-off rate is 7%.

(3) You cannot deduct more in total than the amount of capital expenditure incurred for establishing the trees up to the time at which they are established.