Those investing in plantation forestry will have increased certainty following today's announcement by the Australian Government to extend the '12 month rule' for certain forestry prepayments, introduced under the Taxation Laws Amendment Act (no.1) 2002, until 30 June 2008.
The extension for a further two years of the '12 month rule' will allow an extensive review to be conducted into all aspects of support for the plantation timber industry.
Forestry and Conservation Minister, Senator Ian Macdonald, and Revenue Minister and Assistant Treasurer, Mal Brough, said the extension would help minimise disruption to investors in forestry managed investment schemes and MIS managers while the review is conducted and options are developed to support the industry over the long term.
The review will examine whether the current commercial and taxation arrangements for plantation investment are appropriate, including those affecting long-term investment in plantations. Details of the review and the submission process will be announced shortly.
"Over $4 billion has been invested in establishing 600,000 hectares of new plantations since the signing of the Plantations for Australia: the 2020 Vision," Senator Macdonald said.
"The Australian Government recognises that supporting the development of plantations is an important part of Australia's forest policies. The extension announced today will provide certainty for investors and will enhance the many regional opportunities provided through plantations.
"Importantly, the review will examine how current arrangements and policies are achieving the target of 3 million hectares of plantations by 2020 and will examine any impediments to investment in long rotation plantations. The Government is determined to see the growing plantation industry move forward to address Australia's $2 billion trade deficit in forest and wood products," Senator Macdonald said
Mr Brough said it is important to ensure that industry-specific tax measures like the '12 month rule' are assessed periodically to ensure they continue to be relevant, remain consistent with broader tax policy objectives and support the Government's desired long-term plantation policy outcomes.
"Today's announcement balances the important need for investor confidence with the need to ensure that tax measures remain suitable into the future," Mr Brough said.