Additional Information

WOODLAND TAX RELIEF INCENTIVES

There are numerous tax incentives in place where managing of forestry or woodlands is carried out on a commercial basis. It is worth reviewing the tax consequences of any transactions undertaken with your accountant or tax advisor to ensure that all reliefs are being availed of and that all the necessary documentation is in place

There are certain tax incentives in place where the managing of forestry or woodlands is carried out on a commercial basis :

1. ★An income tax exemption on profits arising from forestry operations.
   

2. ★A capital gains tax exemption on the sale of timber
   

3. ★A partial stamp duty relief on any forestry land.
   

INCOME TAX EXEMPTION 

Profits arising from woodlands managed on a commercial basis are not to be taken into account for any purpose of the tax acts. Losses incurred in the occupation of woodlands managed on a commercial basis with a view to the realisation of profits may not be used to shelter a persons other income from tax. Any profits, gains or losses arising from forestry activities must be included in the taxpayers annual return of income, even though the income or gains are exempt from tax.

HIGH INCOME EARNERS

Where a person is a high-income individual, they are restricted in the extent to which “specified reliefs” can be applied to reduce the individuals tax bill. The provision works so that the “specified reliefs” used in any one year are limited tp 20pc of the individuals “adjusted income”. If a person has other income, then the amount of the forestry exemption will be limited to the greater of €80000 and 20pc of the total income. If your total income is under €125000, the forestry income will not bhe caught by the high-income earners restriction.

CAPITAL ACQUISITIONS TAX

Gifts or inheritances of woodlands within Ireland can qualify for agricultural relief. Agricultural relief is a relief from CAT and takes the form of a flat rate 90pc reduction in the market value of all agricultural property comprised in a gift or inheritance, provided that the donee meets the “farmer test” so that 80pc of the donees assets consist- after taking the relevant gift or inheritance- of agricultural property. Trees and underwood growing on the agricultural land in question are specifically included in the definition of agricultural property, provided that they are growing on the land. Crops or trees that have been harvested or cut down would not therefore qualify for relief. The timing of gifts or inheritances to take account of harvesting of valuable crops or felling of significant tracts of forestry should therefore be considered if passing onto the next generation.

STAMP DUTY ON FORESTRY

There is partial relief from stamp duty in respect of certain instruments relating to the sale or lease of land on which “trees” are growing. The partial relief is given by providing that the value of any trees growing on the land at the time the land is sold or leased will not be taken into account if:

1. ★The trees are being managed on a commercial basis with a view to making a profit;
   

2. ★The trees are growing on a substantial part of the land.
   

3. ★The instrument contains a certificate to such effect.
   

TIMBER INSURANCE

Insure your woodland for:

1. ★Fire, Lightning, Storm and other specified perils.
   

2. ★Fire Brigade charges
   

3. ★Public Liability Claims
   

4. ★Employers Liability Claims relating to maintenance of your Woodland.
   

With effect from the 1st of June 2009 The Forestry Reconstitution scheme did not cover fire or wind damage. It should be noted that failure to reconstitute a damaged plantation will be considered a breach of contract with the Department of Agriculture, Fisheries and Food and repayment of all grants and premiums will be required and further premium payments will be stopped on relevant plantations.

Options Available

1. ★Reconstitution of Trees
   

2. ★The cost of replanting trees after a fire or another insured loss such as storm.
   

3. ★Crop Value
   

4. ★Loss of investment cover for growing timber compensates owners for the growing years lost as a result of fire damage to their plantation or the occurrence of another insured peril.
   

5. ★Fire Brigade Charges
   

6. ★Public Liability
   

7. ★Employers Liability
   

8. ★Unlimited any one Period of Insurance. Employers Liability excludes felling and lopping.
   

NATIVE WOODLAND SCHEME

Native Woodland Establishment is aimed at developing new native woodland on open sites. Sites of particular relevance under this element are those located beside existing native woodlands or in areas along streams or rivers. The sensitive development of native woodland cover on these sites will link up existing habitats and will help create a network of native woodlands across the landscape.

Herbicide application and fertilising are to be carried out only where ecologically appropriate and at the minimum level required to achieve successful woodland development. Similarly, natural regeneration of trees is also encouraged, where it represents a viable option to planting. Particular emphasis is also placed on matching the species list to the particular native woodland type that would occur on that particular site type.

CARBON SEQUESTRATION IN IRISH FORESTS

There is general consensus that increasing atmospheric levels of the so-called “greenhouse gases” are causing climate change and are likely to continue doing so. These gases arise mainly from the burning of fossil fuel, deforestation, other land-use change, and industrial processes. The ability of forests to store and sequester atmospheric carbon is well known and established. Indeed, forests represent the largest global terrestrial store of carbon, containing approximately 39% of global soil carbon and 77% of global vegetation carbon.

New forests have the potential to take CO2 from the atmosphere and store it in vegetation and soils. However, the sink potential of forests may be greatly reduced. Forests play an important role in the global carbon cycle and the maintenance of forests is a vital component of any efforts to mitigate climate change.

THE INFLUENCE OF THE BANK VOLE IN IRISH FORESTRY

The bank vole is one of only 6 small mammal species in Ireland. The vole has the general appearance of a mouse with ears which show above the reddish-brown fur in the adult. Its favoured habitats include hedgerows, briars, coppices, woodland and scrub. The vole will also inhabit rough grass but they dislike open fields. The bank vole was first recorded in Ireland near Listowel, Co. Kerry in 1964. A survey carried out in 1982 showed that bank voles occupy probably the whole of Co. Limerick; most of Co. Kerry; a large part of Co. Cork; a substantial strip of east Co. Tipperary and the south-east of Co. Clare.

During the winter months, when its normal food supply is most impoverished, the bank vole attacks young trees. Commencing at the base of the tree, the vole strips the bark away from the main stem and feeds on the cambium. Sometimes the damage is slight but more often it can be found up to 0.3m above ground and girdling the main stem. Even though badly damaged trees flush, growth is reduced, swelling occurs at the base of the remaining bark and gradually the needles exhibit a reddish appearance. Death for badly damaged trees is inevitable. Bank vole damage was first noted in state forests.

The overall level of damage caused by the bank vole is low but relatively high losses may occur in localised areas. The bank vole does require vegetation cover and the removal or suppression of this may significantly reduce the incidence of damage.