Who can claim
This deduction is available to individuals and companies.
- You hold an interest in a qualifying forestry managed investment scheme and make the payment under a formal agreement.
- You do not have day-to-day control over the forestry operation and the scheme has multiple participants, or a promoter or manager conducts the operation for participants in a similar arrangement.
- The forestry manager confirms the scheme satisfies the 70% direct forestry expenditure test.
- The scheme is intended to establish every tree covered by the payment within 18 months after the end of the income year in which the first participant payment is made.
- An initial participant satisfies the four-year holding rule unless an event outside their control applies; a subsequent participant claims only eligible ongoing payments.
What you cannot claim
- A subsequent participant cannot deduct the amount paid to acquire the forestry interest under this rule.
- Borrowing costs, interest, stamp duty, GST, processing, marketing and post-threshold transport, handling or non-field stockpiling are excluded from the forestry deduction.
How the amount is worked out
Claim eligible initial and ongoing payments for an initial participant, or eligible ongoing payments for a subsequent participant, only after applying the scheme, 70% direct-forestry-expenditure, 18-month establishment and four-year holding rules.
Records the ATO expects
- Scheme agreement
- Forestry manager statement
- Payment records
- Holding and disposal dates
Where this rule comes from
Primary source: Income Tax Assessment Act 1997 section 394-10 (Section 394-10). Reviewed 30 July 2026. Covers the 2025-26 and 2026-27 income years.