31. Forestry and this tax
Answer
The concern here is that forestry takes 28 years before the cash comes in and so the investor has no cash to pay the tax until then. I’m sure there’ll be lots of special cases like this, particularly in biological businesses and as has been the practice historically, each may require tweaking of the conventional model to accommodate it. There will no doubt need to be costs and liabilities that get apportioned when investors change their rights to harvest. In other words the tax liability just builds up each year together with the cost of money charge, and then if you sell out before harvest you pay your portion of the tax liability then. I’m not about to sit down and tune up a special model for forestry but no doubt that would be done at the time as it always has been with past tax regimes or changes.
