tax office takes tree line on carbon

Tax Office takes tree line on carbon
By PHILIP HOPKINS
A NEW Federal Government law
that will enable money spent on
planting trees as a carbon sink
to be a tax deduction is likely to
spur investment in carbon
sequestration projects.
Taxation changes to allow
the carbon sink developments,
which were included in the May
2007 federal budget, were
passed in the Senate.
The legislation was held over
due to last year's federal
election.
From July 1, 2007, investors
in qualifying forestry carbon
sinks can use the horticulture
tax arrangements. These will be
immediately deductible for the
first five years as an incentive to
invest in carbon credits.
Andrew Grant, chief executive
of C02 Group, welcomed
the changes.
"Previously, if you planted a
tree and did not cut it down, you
could not claim any
deductibility for the expenditure
in establishing the forest,"
he said. "If you cut it down, all of
the provisions of the Tax Act
were available, but because you
did not cut it down, it didn't
qualify."
Mr Grant said there had been
a huge anomaly because if you
planted a tree for Landcare
reasons and you were a primary
producer, you were able to claim
a tax deduction for the capital
expenditure.
"It has given carbon sequestration
equality with all other
aspects of forestry and environmental
management - not an
advantage, just equality," he
said. "For us, it's important
because it means the cost of
creating the carbon to our client
base is now cheaper because
they can deduct their capital
expenditure. If a big emitter
invested in a project, previously,
none of those costs were
deductible. Now they are."
The changes were revealed
only weeks before the release of
the Federal Government's green
paper on the Australian
emissions trading scheme,
which is expected to be a big
step forward for the carbon
sequestration industry.
Carbon Planet has had its
operations and services
certified "greenhouse friendly"
by the Department of Climate
Change. Established in 2000,
Carbon Planet provides solutions
for businesses to manage
greenhouse gas emissions.
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