NO.092

Tax Concessions to Encourage Carbon Sink Forests

The Treasurer today hailed the introduction of legislation providing tax concessions for carbon sink forests as an important practical measure to reduce Australia’s net carbon emissions.

Forests will play an important role in reducing Australia’s net greenhouse gas emissions in the future. Forests act as carbon sinks by absorbing carbon dioxide from the air and storing it as carbon.

The Tax Laws Amendment (2007 Measures No. 6) Bill 2007, introduced into Parliament today, allows carbon sink forest operators to claim a tax deduction for the cost of establishing trees in a qualifying carbon sink forest.

To help the carbon sink forest industry establish a strong foundation in Australia, an immediate deduction will be allowed for a five year period from 1 July 2007.  From 2012-13 the immediate deduction will be replaced with a write-off under the general horticultural plant provisions.

To qualify for tax deductibility, carbon sink forest operators will have to comply with environmental and natural resource management guidelines.

This measure reflects the Australian Government’s commitment to addressing climate change issues with practical solutions that do not damage the Australian economy.

The Government is currently developing standards for robust and transparent offsets to be accredited for use in the Australian Emissions Trading System.  A discussion paper on incentives for abatement, including carbon offsets, will be issued in September 2007.

CANBERRA

13 September 2007

Contact: Renae Stoikos – 02 6277 7340