Timber schemes get tax reprieve

By George Liondis

FORESTRY-based agribusiness investment schemes have received a major fillip, with plans to scrap rules allowing them to bring forward tax deductions put on hold for two years.

The changes, announced in last week’s Budget, have already had a significant effect on one agribusiness provider, Great Southern Plantations, whose share price closed 25 cents stronger following the Budget at $3.40 on the back of the news.

The 12-month prepayment rule for forestry schemes had been due to expire on June 30, 2006.

It allows agribusiness investors to obtain an immediate tax deduction for funds contributed to a forestry scheme in one financial year, even if the scheme itself does not invest the funds until the following year.

The two-year extension of the rule to June 30, 2008, will cost the Government $65 million.

The Government has also pledged to conduct a broader review of the tax treatment of plantation forestry schemes.

David Ikin, national marketing manager for Great Southern, said there was hope the Government would extend the rule indefinitely following the review.

“We have got it now until 2008 with a promise of a review so we are hopeful,” he said.

“This is something that is definitely good for the industry and provides us with a lot of certainty. There was a lot of uncertainty in the lead up to the Budget.

“I think the market has no doubt reacted to the certainty that has been introduced by the Government.”

The change comes as the agribusiness sector sets itself for a stellar year of growth.

Forecasters are expecting agribusiness investments to reach $950 million this financial year, according to Timber scheme manager Queensland Paulownia Forests — a figure double last year’s result.

The group’s chief executive, Ian Sandeman, said the Government’s decision would spur even greater interest in agribusiness investments.

“If the change hadn’t been announced, that $950 million would not have been there next year,” he said.