Amendment of the Environmental and Natural Resource Management Guidelines for carbon sink forests under section 40J of the Income Tax Assessment Act 1997

Closed 13 Sep 2018

Opened 13 Sep 2018


The climate change function transferred to our department from the Department of the Environment and Energy on 1 February 2020.

Taxpayers may be able to claim a deduction for costs associated with establishing forests for the purpose of sequestering carbon, if they meet certain conditions specified in section 40J of the Income Tax Assessment Act 1997. The requirements include complying with Natural Resource Management Guidelines (Guidelines). The department administers these Guidelines, which are set out in a legislative instrument.

The Guidelines require those seeking the tax deduction to (1) apply best practice approaches for achieving water and land environmental benefits, (2) comply with applicable state and territory and local government land use planning legislation and be guided by regional NRM plans, and (3) register legal rights concerning carbon sequestration in carbon sink forests on land titles.

Proposed Minor Amendment

The Guidelines are due to sunset on 1 April 2019. In considering the potential for the Guidelines being remade, the Department is reviewing their operation. The department proposes a minor amendment to the Guidelines to streamline their operation for relevant Emissions Reduction Fund (ERF) projects wishing to seek the tax deduction. A relevant ERF project would be taken to have met the requirements of the Guidelines without going through the additional administrative process of demonstrating compliance with the Guidelines. Relevant ERF projects are those that plant new forests under the 'Reforestation by Environmental or Mallee Plantings' method, or the 'Afforestation and Reforestation' method. These ERF projects already need to meet requirements similar to those under the Guidelines. This amendment would result in a reduction in regulatory burden for these projects.

Public consultation

The department invited interested businesses, community organisations and individuals to make submissions on the proposed minor amendment. The public consultation period closed on 13 September 2018.


  • Emissions Reduction Fund


  • Climate Change
  • Emissions Reduction Fund