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DP 4: Improvement destroyed or made useless
or “Tax deduction for forestry improvements destroyed or made unusable”
You could also call this:

“Getting money back for costs under a forestry agreement”

When you make a forestry encouragement agreement under the Forestry Encouragement Act 1962, you can get some money back for certain costs you have.

You can get money back for planting or looking after trees under the agreement, but only if you haven’t already received money for this and won’t get money for it later under the agreement.

You can’t get money back for costs that are paid for by grants from the Forestry Encouragement Grants Regulations 1983. These grants cover things like planting and looking after trees, office costs, rates, rent, insurance, and interest on money borrowed to grow the trees.

You can get money back for paying interest on advances you received under the agreement. You can also get money back when you pay off some of the main amount you received as an advance.

This rule overrides the usual rule about not getting money back for capital expenses. However, you still need to meet the general permission rule, and the other general limits still apply.

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Next up: DP 6: Forestry encouragement agreement: no deduction

or “No deduction for exempt advance payments under forestry agreements”
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Part D Deductions
Forestry expenditure

DP 5Forestry encouragement agreement: deductions

  1. This section applies when a person makes a forestry encouragement agreement under the Forestry Encouragement Act 1962.

  2. The person is allowed a deduction for expenditure that they incur if all the following apply to the expenditure:

  3. it is expenditure incurred in planting or maintaining trees under the agreement; and
    1. it is not expenditure for which an advance has been or is to be made under the agreement; and
      1. it is not expenditure represented in a payment made to the person under the Forestry Encouragement Grants Regulations 1983 and incurred in—
        1. planting or maintaining trees; or
          1. meeting administrative overheads, rates, rent, insurance premiums, or other expenses of the same kinds; or
            1. paying interest on money borrowed for the purpose of developing the trees and employed as capital in developing the trees.

            2. The person is allowed a deduction for expenditure that they incur in—

            3. making a payment of interest for an advance made under the agreement:
              1. making a payment reducing the principal of an advance made under the agreement.

                1. This section overrides the capital limitation. The general permission must still be satisfied and the other general limitations still apply.

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