Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Hansard source

I have some information on a number of questions. One of those was, again, a question which I actually answered yesterday, but I stress it again for Senator Boswell, and Senator Joyce, who is an intelligent man and particularly understands these issues: land is not deductible under this provision. Land is treated as a CGT asset under the existing tax law and nothing in this bill alters this treatment. The explanatory memorandum for the carbon sink measures says at paragraph 3.39:

Expenditure on assets separate from the trees is not considered to be establishment expenditure.

Land is a separate asset to the trees themselves. I do not know how much clearer the legislation, the EM and that explanation can be. I know it is an important issue and I know it is one that is particularly exercising the minds of National Party senators, but it could not be clearer.

I will address a number of other matters that have been raised. The legislation, which allows a deduction for the establishment expenditure for carbon sink forests, is modelled on the provisions for deduction of costs associated with establishing horticultural plants. Under these provisions, there is no requirement for the taxpayer to leave the plant in the ground—whether it be a grapevine or an orange tree, for instance. The tax law simply recognises that a legitimate expense has been incurred in the course of business and allows a deduction.

It is worth noting, though, that there are additional requirements for claiming a deduction under the carbon sink forest provisions. These include that the primary and principal purpose for establishing the trees is carbon sequestration. The purpose cannot include felling the trees. The expenditure cannot be incurred under a managed investment scheme. The trees must be consistent with the Kyoto protocol requirements for a recognised forest. In addition, the taxpayer must give the tax commissioner a notice which confirms that they have met the aforementioned requirements and must comply with environmental and resource management guidelines. Issues expected to be covered in the notice given to the tax commissioner include the latitude and longitude of the forest, the species of the trees planted, the estimated number of trees planted per hectare and the rationale for the probability of meeting the relevant requirements. Those are all the tests and criteria. You will be seeking more information on these things; I hope that gives you most, if not all, of the information you are seeking, Senator Milne. I am happy to try and get further information for you. Hopefully, that addresses what I know has been a major concern of the National Party members.