Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-25 - TRADING STOCK  

Division 70 - Trading stock  

Subdivision 70-E - Miscellaneous  

SECTION 70-120   Deducting capital costs of acquiring trees  

70-120(1)    
This section gives you deductions for your capital costs of acquiring land carrying trees or of acquiring a right to fell trees.

Note:

This section is included in this Division because:

• trees felled for sale, or for use in manufacture, by you will usually become your trading stock; and

• before they are felled, the trees are covered by sections 70-90 and 70-105 because of section 70-85 .

Land carrying trees

70-120(2)    

You can deduct the amount you paid to acquire land carrying trees if:

(a) some or all of the trees are felled during the income year for sale, or for use in manufacture, by you for the *purpose of producing assessable income; or

(b) some or all of the trees are felled during the income year under a right you granted to another entity in consideration of payments as or by way of *royalty; or

(c) the *market value of some or all of the trees is included in your assessable income for the income year by section 70-90 (because you disposed of the trees outside the ordinary course of *business) or section 70-105 (because of your death).

(It does not matter when you acquired the land.)

Note:

The market value of trees is not included in your assessable income for the income year by section 70-105 (because of your death) if your legal personal representative elects under subsection 70-105(4) to have a nil amount included instead.

Right to fell trees

70-120(3)    

You can deduct the amount you paid to acquire a right to fell trees if:

(a) some or all of the trees are felled during the income year for sale, or for use in manufacture, by you for the *purpose of producing assessable income; or

(b) some or all of the trees are felled during the income year under a right you granted to another entity in consideration of payments as or by way of *royalty.

(It does not matter when you acquired the right.)

How much you can deduct for costs of acquiring land or right

70-120(4)    

You can deduct for the income year so much of the amount you paid as is attributable to the trees covered by a paragraph of subsection (2) or (3).

70-120(5)    
If you can deduct an amount because of paragraph (2)(c), you can also deduct for the income year so much of any other capital expenditure you incurred as is attributable to acquiring the trees covered by that paragraph (except so far as you have deducted it, or can deduct it, for any income year under a provision of this Act outside this section).

No deduction for carbon sink forests

70-120(5A)    

You cannot deduct under this section so much of an amount you paid or incurred as is attributable to the establishment of trees for which any entity has deducted, or can deduct, an amount for any income year under Subdivision 40-J .

Non-arm's length transactions

70-120(6)    
If:

(a) you can deduct an amount under this section for expenditure incurred in connection with a transaction; and

(b) the parties to the transaction did not deal with each other at *arm's length; and

(c) the amount of the expenditure is greater than the *market value of what the expenditure is for;

the amount of the expenditure is instead taken to be that market value. This has effect for the purposes of working out what you can deduct under this section.