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Govt aiming to fix forestry tax rulesDecember 18, 2009 - 10:44AM



Draft laws that aim to fix a tax rule affecting investors in forestry managed investment schemes have been released for public consultation.

The federal government decided to introduce the changes after the collapse of Timbercorp and Great Southern earlier this year.

Timbercorp left 18,000 investors in the lurch and owed $1.1 billion, while Great Southern's schemes had raised $2 billion from 43,000 investors.

Assistant Treasurer Nick Sherry said the changes would protect around 19,000 investors in collapsed forestry managed investment schemes from an unintended adverse tax outcome.

The draft legislation amends the four-year rule to allow an investor's deduction to stand if a capital gains tax event happens because of circumstances outside the initial investor's control.

It would also allow the deduction to stand if the initial investor could not have reasonably foreseen this capital gains tax event happening at the time they acquired the forestry interest.

"The Rudd government considers that denying the deduction in these circumstances unduly penalises investors," Senator Sherry said.

The rule applies to capital gains tax events from July 1, 2007, and the amendments in the draft legislation would take effect from this date.

The draft legislation is available at www.treasury.gov.au and consultation closes on Friday, January 15.

This would allow the introduction of the legislation by early 2010, Senator Sherry said.