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Inland Revenue

Tax Policy

Last updated 1 December 2021
Closing date 31 January 2022

Status Complete

Forestry aggregation tax issue

The Government wants to support small forestry block owners so they can group together to achieve economies of scale for harvesting timber. However, some tax matters might be an obstacle to such aggregation.

An officials' issues paper, Forestry aggregation tax issue, sets out the tax issue and is seeking feedback on:

  • whether the tax impediment to aggregation has been correctly identified, and
  • views on a potential exception to treating an aggregation of forestry interests as a disposal for tax purposes, when:
    • the aggregation entity is either a look through company, limited partnership or ordinary partnership, and the foresters have similar relative assets and risks before and after aggregation, so that they continue to be liable for taxation on the harvest or subsequent sale of the forest
    • the only consideration the foresters receive from the aggregation is an interest in the new look-through vehicle, and
    • the forest blocks are of a similar age, with the trees being mainly at least 20 years old, which means that they are likely to be approaching harvest.

Submissions closed on 31 January 2022.