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INCOME TAX ASSESSMENT ACT 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-10 - CAPITAL ALLOWANCES: RULES ABOUT DEDUCTIBILITY OF CAPITAL EXPENDITURE  

Division 40 - Capital allowances    View history reference

Subdivision 40-J - Capital expenditure for the establishment of trees in carbon sink forests    View history reference

Operative provisions

SECTION 40-1005  Deduction for expenditure for establishing trees in carbon sink forests  

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40-1005(1)  

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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.

40-1005(2)  

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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%.

40-1005(3)  

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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.

40-1005(4)  

(Repealed by No 38 of 2008)

40-1005(5)  

The conditions are as follows:
Conditions for deduction for establishing trees in carbon sink forest
ItemCondition
1You own the trees and any holder of a lease, lesser interest or licence relating to the land occupied by the trees does not use the land for the primary and principal purpose of *carbon sequestration by the trees.
2The trees occupy land you hold under a lease, or a *quasi-ownership right granted by an *exempt Australian government agency or an *exempt foreign government agency, and:
(a) the lease or quasi-ownership right enables you to use the land for the primary and principal purpose of *carbon sequestration by the trees; and
(b) any holder of a lesser interest or licence relating to the land does not use the land for the primary and principal purpose of carbon sequestration by the trees.
3You:
(a) hold a licence relating to the land occupied by the trees; and
(b) use the land for the primary and principal purpose of *carbon sequestration by the trees, as a result of holding the licence.


 



This information is provided by CCH Australia Limited. View the disclaimer and notice of copyright.
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