The practical implications of the Emissions Trading Scheme (ETS) is starting to be felt, especially for owners of forest land as some deadlines pass and others are fast approaching.

Under the ETS, forest land owners are classified as owners of either pre-1990 forest land or post-1989 forest land. How they are classified depends on the type and extent of tree cover as at 31 December 1989 and whether the land has been deforested in the interim.

For those who hold pre-1990 forest land, the application of the ETS is mandatory, unless an exemption has been approved.

One of those exemptions was if a pre-1990 forest land owner held forestry land of 50 hectares or less, they could apply to be exempted from the ETS. However, the due date (30 September 2011) for this application has just passed, which means those taxpayers who wanted to rely on that exemption, but did not apply in time, are subject to the ETS.

There is some respite for those taxpayers who have failed to make the election. They can apply for a free allocation of Emission Units (“EUs”) to compensate for being subject to the ETS. All applications for the allocations of EUs for pre-1990 forest land need to be made by 30 November 2011.

There are important requirements which need to be addressed to determine exactly how many EUs are allocated to each forestry land owner. For instance, if the property has been sold recently, the allocation available may have diminished. We recommend that professional help is sought so that each affected forest land owner can maximise the amount of EUs that they can receive.

We also recommend that this application process commences as soon as possible, as it can take some time for the process to be completed. Further, if amendments need to be made to the application, it is preferable to have sufficient time to remedy any problem, particularly when you must accurately map out the land for which the EUs are being claimed for. It is imperative that this is completed correctly.

How it affects you

If you think that you may be affected by the ETS, particularly owners of pre-1990 forest land, we recommend that you consult your advisor as soon as possible so you do not miss out on the opportunity to obtain free EUs in relation to that land, especially as the application of the ETS to pre-1990 forest land is compulsory.


A recent case concerning the calculation of income for child support purposes has raised some important questions about the availability of income to a person and the impact that may have on the person’s child support assessment liability.

In the Case, Mr B channelled income from his company, WR Ltd (the company), through the Lenbe Trust (the trust), which he controlled, reducing his taxable income and correspondingly his liability for child support. The High Court agreed that some of the income should be taken into account in assessing child support payments but not to the extent that the Family Court had held.

The issues between the parties were primarily related to what “income, earning capacity, property, and financial resources” were available to Mr B. The Court of Appeal has noted that the following issues appeared to need to be addressed:
  • Should the trust income be treated as Mr B’s income for the purposes of the Child Support Act 1991 (“the Act”)? 
  • If so, should the whole of the dividend received by the trust have been treated as income to Mr B? 
  • Should the vehicle private use and interest be disregarded?
  • Should the fresh drawings from the company have been taken into account for the purposes of the Act?
  • What is the position with regard to Mr B’s inheritance?
  • Should there have been a “development salary” recognised after 2003 when the company had established a business development project, and as a related question, what was Mr B’s earning capacity, particularly after 2003?
  • Whether it was just, equitable and otherwise proper to make an order (assuming Ms D succeeded in any of the above arguments)?
  • The Court of Appeal has granted leave to appeal because “how an arrangement of the kind set up by Mr B should be treated under the Act seems to us a question of sufficient general importance to merit a second appeal”.

How it affects you

The Court of Appeal’s final decision on this case could have a significant impact on how effective the use of business structures may be for the purposes of “controlling” income levels of a non-custodial parent.

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