Legislation for new taxation arrangements for forestry managed investment schemes (MIS) has been passed by both houses of parliament
After a two year process, including a comprehensive Federal Government review of the taxation arrangements for investment in plantation forestry, the legislation for new taxation arrangements for forestry managed investment schemes (MIS) has been passed by both houses of parliament.

Peak forest industry body, NAFI, and hardwood plantation body, Tree Plantations Australia (TPA), representing the majority of Australia’s Kyoto forests, said the passing of the legislation is an important milestone for the plantation forestry sector, creating a secure environment for long term investment in the forest industry, and will help create a low-emissions carbon future for Australia.
“The legislation provides certainty for investors in plantation establishment as well as facilitating the development of a secondary market for established plantations that are more than 4 years old,” said NAFI Chief Executive Officer, Catherine Murphy.
“This will make plantation investment attractive to a wider range of investors,” she said.
“NAFI is pleased that the legislation has passed through both houses of Parliament without amendment,” said Mrs Murphy.
TPA Chief Executive Officer, Allan Hansard, said the timing of the announcement is significant as Australia moves towards developing a secure environment for carbon positive industries.
“Australia’s tree plantations will now be able increase their positive contribution to local communities, the national economy and the environment. Plantations already sequester over 20 million tonnes of greenhouse emissions, offsetting emissions from other sectors,” he said.
“The new taxation arrangements for forestry MIS will underpin value-added processing facilities including two major pulp mill projects proposed in Tasmania and South Australia. The environment and rural communities will benefit greatly.
“NAFI and Tree Plantations Australia, in collaboration with other industry associations - Treefarm Investment Managers Australia (TIMA), Australian Plantation Products and Paper Industry Council (A3P) and Australian Forest Growers (AFG) - campaigned for the changes throughout the two-year process.
“We would like to thank the other associations for their support and contribution throughout the process.
“As a result the industry can now continue to expand with long term security,” he said.

Taxation Incentives to Establish Forests
New arrangements for Forestry Managed Investment Schemes
Following consultation the Australian Government announced on 21 December 2006 new arrangements for the taxation of investments in forestry managed investment schemes (MIS).  In developing the content of the new arrangements the Treasury, the Australian Taxation Office, the Department of Prime Minister and Cabinet, and Department of Agriculture, Fisheries and Forestry consulted extensively with key industry stakeholders.
The new taxation arrangements for investments in forestry MIS recently passed through parliament and will come into effect on 1 July 2007.   Under the new arrangements the timeframe from receipt of investor funds to planting has been extended from 12 to 18 months, enabling companies to account for seasonal conditions. Further 70 per cent of investor funds will now need to be directed to plantation establishment, tending and harvesting. This is critical for three reasons:

it sends a signal to the community that the Government is serious about viable plantation development;
 
it addresses perceptions that these schemes have been structured for the purposes of tax minimisation; and
it will remove promoters who have been charging excessive fees and commissions.

It is expected that the new arrangements, an improvement on current arrangements, will encourage further expansion of the plantation estate, and associated infrastructure to assist with value adding. These arrangements are to be reviewed in two years time.