Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary for Social Inclusion and the Voluntary Sector) Share this | Hansard source

Thank you, Senator Coonan, Senator Milne and Senator Joyce for those contributions about these two amendments to the Tax Laws Amendment (2009 Measures No. 4) Bill 2009. The effect of the amendments would be to remove the tax deduction for the establishment of carbon sink forests. The government is not prepared to do that.

The tax deduction provides an incentive for growing forests for the specific purpose of taking carbon dioxide out of the atmosphere and to help national efforts to reduce greenhouse gas emissions. We have been over and over this issue many times, including through the Senate committee inquiry which reported in September 2008. It found that the carbon sink forest tax legislation is ‘a valuable policy addition that will promote greenhouse gas reductions’. The report notes that the legislation addresses an anomaly in that other forms of greenhouse gas emissions reduction activities by industries are tax-deductible. The amendments would have the effect of reversing that and creating an inconsistency in taxation treatments relating to greenhouse gas emissions.

Your amendment on sheet 5907 would impose additional conditions before a tax deduction could be claimed for establishing carbon sink forests. The Environmental and Natural Resource Management guidelines for the tax measure foster complementary environmental and natural resource outcomes and the Senate committee report of September 2008 recognised the benefits of relying on existing state and territory regulatory structures for the management of impacts of carbon sink forests on the environment. After that Senate inquiry, and in consultation with the crossbenches and taking into account concerns from the opposition, the Minister for Climate Change and Water amended environmental guidelines on relevant legislation to help address this issue. The government is committed to closely monitoring carbon sink forest establishment activity under this legislation.

I now go to a specific issue that has been part of the debate contributions today and reiterated by Senator Joyce, and that is this notion that the legislation can be used to purchase land for growing trees. I would like to draw everyone’s attention to the interpretive decision by the ATO which was recently released on this matter. It is ATO ID 2009/60, which concerns a taxpayer who purchased land for growing trees. The ATO made it very clear that the cost of purchasing land to establish a carbon sink forest is not establishment expenditure. The legislation operates in the same way as arrangements for horticultural plants, and no-one has ever suggested that land is deductible under those provisions. So the government is not supporting this amendment. I think we all understand that, if we continue to have these debates every time we have a tax laws amendment bill, we will not make too much progress.