Show at X the total income from the forestry interests that the fund holds in forestry managed investment schemes (FMISs). The amount you show at X will depend on the points below.
Do not include capital gains from an FMIS; show these at A Net capital gain. For more information on the CGT treatment of the fund’s forestry interests, see the Guide to capital gains tax 2016.
If the fund is a member of a collapsed agribusiness managed investment scheme, for information about calculating your income and deductions see Collapse of agribusiness managed investment schemes: participant information.
Definitions
The fund is an initial participant in an FMIS if:
- the fund obtained its forestry interest in the FMIS from the forestry manager of the scheme, and
- the fund’s payment to obtain the forestry interest in the FMIS results in the establishment of trees.
The fund is a subsequent participant in an FMIS if it acquired its interest through secondary market trading. This means it acquired its interest other than as an initial participant; usually by purchasing that interest from an initial participant in the scheme.
The forestry manager of an FMIS is the entity that manages, arranges or promotes the FMIS.
A forestry interest in an FMIS is a right to the benefits produced by the FMIS (whether the right is actual, prospective or contingent and whether or not it is enforceable).
The amount of the fund’s total forestry scheme deductions is the total of all the amounts that it can deduct or has deducted for each income year that it held its forestry interest. See U Forestry managed investment scheme deduction item 11 for more information on amounts that the fund can deduct.
The amount of the fund’s incidental forestry scheme receipts is the total of all the amounts that it received from the FMIS in each income year that it held its forestry interest, other than amounts received because of a CGT event, that is, a sale or a harvest.
Initial participant in an FMIS
Thinning receipts
If the fund received thinning proceeds from its forestry interest, include at X the actual amount received.
Sale and harvest receipts: forestry interest no longer held
If:
- the fund ceased holding its forestry interest as a result of a CGT event (because it sold its interest or it received harvest proceeds), and
- the fund has deducted or can deduct amounts paid under the FMIS in relation to the forestry interest or would be entitled to deduct such amounts but for a CGT event happening within 4 years after the end of the income year in which the fund first pays an amount under the FMIS
then include at X the market value of the forestry interest at the time of the CGT event.
Sale and harvest receipts: forestry interest still held
If:
- a CGT event happened and the fund still holds its forestry interest (because it sold part of its interest or it received harvest proceeds), and
- the fund has deducted or can deduct amounts paid under the FMIS in relation to the forestry interest or would be entitled to deduct such amounts but for a CGT event happening within 4 years after the end of the income year in which the fund first pays an amount under the FMIS
then include at X the amount by which the market value of the forestry interest was reduced as a result of the CGT event.
Subsequent participant in an FMIS
Thinning receipts
If the fund received thinning proceeds from its forestry interest, include at X the actual amount received.
Sale and harvest receipts: forestry interest no longer held
If:
- the fund ceased holding its forestry interest as a result of a CGT event (because it sold its interest or it received harvest proceeds), and
- the fund has deducted or can deduct or could have deducted an amount if the fund had paid the amount under the FMIS in relation to the forestry interest
then include at X the lesser of the following two amounts
- the market value of the forestry interest at the time of the CGT event
- the amount (if any) by which the total forestry scheme deductions exceed the incidental forestry scheme receipts ('net deductions').
Example 1 shows how to calculate the amount to include at X where the fund sold its forestry interest, and the capital gains tax consequences.
Sale and harvest receipts: forestry interest still held
If:
- a CGT event happened and the fund still holds its forestry interest (because it sold part of its interest or it received harvest proceeds), and
- the fund can deduct or has deducted or could have deducted an amount if the fund had paid the amount under the FMIS in relation to the forestry interest,
then work out the lesser of the following two amounts
- the market value of the forestry interest at the time of the CGT event
- the amount (if any) by which the total forestry scheme deductions exceed the incidental forestry scheme receipts ('net deductions').
Use the lesser of the two amounts in the following formula:
Lesser of the two amounts worked out above |
X |
the decrease (if any) in the market value the market value of the forestry interest |
Include at X the amount calculated using the formula. The remainder of the net deductions will be claimed in a future income year (a year in which the fund receives further proceeds from a harvest or the sale of its forestry interest).
Example 2 shows how to calculate the amount to include at X where there is a harvest payment made and the fund still holds the forestry interest, and the capital gains tax consequences.
To complete this item
Add up all the amounts you worked out for each FMIS in which the fund holds a forestry interest and write the total at X.
See examples 1 and 2 for how to calculate the amount you show at X where the fund is a subsequent participant that holds the forestry interest on capital account.
For more information on the CGT treatment of a fund’s forestry interest, see the Guide to capital gains tax 2016.
Example 1: Sale receipts: forestry interest no longer held
Cedar Superannuation Fund is a subsequent participant in an FMIS. Cedar Superannuation Fund sold its forestry interest (held on capital account) for $20,000 (market value). The sale of the forestry interest is a CGT event. The original cost base for the forestry interest is $14,000.
During the time that the Cedar Superannuation Fund held the forestry interest, it claimed $4,000 in deductions (its total forestry scheme deductions) for lease fees, annual management fees and the cost of felling that it paid to the forestry manager.
During the same period, Cedar Superannuation Fund received $1,500 from thinning proceeds (its incidental forestry scheme receipts).
Cedar Superannuation Fund will need to include $2,500 (that is, $4,000 minus $1,500) at X, because this amount is less than the market value of its forestry interest at the time of the CGT event.
CGT Notes:
- Cedar Superannuation Fund will take the amount that it included at X into account when working out the amount to include at A Net capital gain.
- The capital gain would be $3,500 (capital proceeds of $20,000 less cost base of $16,500 (made up of $14,000 plus $2,500 that was included in assessable income)).
Example 2: Harvest receipts: forestry interest still held
Oakey Superannuation Fund is a subsequent participant in an FMIS. Oakey Superannuation Fund holds the forestry interest on capital account and received a harvest proceeds payment of $5,000 in 2015–16. Oakey Superannuation Fund's interest has been reduced by 25%.
The market value of Oakey Superannuation Fund's forestry interest just before it received payment for the harvest (a CGT event) is $20,000. After Oakey Superannuation Fund received this harvest payment, the market value of its forestry interest was reduced to $15,000. The original cost base for the forestry interest is $14,000.
During the time Oakey Superannuation Fund has held the forestry interest, it claimed $4,000 in deductions (its total forestry scheme deductions) for lease fees, annual management fees and the cost of felling that it paid to the forestry manager.
During that same period, Oakey Superannuation Fund received $1,500 from thinning proceeds (its incidental forestry scheme receipts).
Step 1 |
Work out the lesser of the market value and net deductions The market value of the forestry interest (at the time of the CGT event) is $20,000. The amount by which the total forestry scheme deductions exceeds the incidental forestry scheme receipts is $2,500 (that is, $4,000 minus $1,500 for the net deductions). The amount used in step 2 is $2,500 (net deductions). |
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Step 2 |
Using the formula above: |
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$2,500 |
x |
$5,000 |
= |
$625 |
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Step 3 |
Oakey Superannuation Fund will need to include $625 at X in its 2015 tax return. |
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CGT Notes:
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End of example
D1 Gross foreign income
Show at D1 the gross assessable income derived by the fund from foreign sources, including dividends (e.g. New Zealand franking company dividends and supplementary dividends), interest, and attributable income though the controlled foreign company (CFC) regime.
Show at D1 any foreign source income included in the fund’s share of net income from a trust or any foreign source income received from a partnership. Do not include this amount at:
- I Gross distribution from partnerships
- Q Trust distributions other amounts.
Any foreign source income included in the fund’s share of net income from a trust that the fund is unable to report on a gross basis can be included at D1 on a net basis.
Do not reduce gross foreign income by exempt current pension income. Exempt current pension income is shown at Y Exempt current pension income.
Do not show at D1:
- any Australian franking credits attached to New Zealand franking company dividends; these should be shown at E Australian franking credits from a New Zealand company
- foreign exchange gains and losses; such gains and losses (from both foreign and domestic sources) should be shown at G Foreign exchange gains or at R Foreign exchange losses item 11 Deductions as appropriate
- foreign income to the extent it is non-arm’s length income of a complying superannuation fund, complying ADF or a PST; show this amount at U Net non-arm’s length income
- foreign source capital gains and losses; net capital gains should be included at A Net capital gain. An Australian superannuation fund makes a capital gain or capital loss if a CGT event happens to any of its worldwide CGT assets. A fund that is not an ‘Australian superannuation fund’ makes a capital gain or loss, generally speaking, if the CGT asset is taxable Australian property just before the CGT event happens.
For more information, see:
- the Guide to capital gains tax 2016
- the definition of Australian superannuation fund.
The fund may also need to complete a Losses schedule 2016.
If the TOFA rules apply to the fund, include gross foreign income from financial arrangements subject to the TOFA rules at D1.