The Federal Government has introduced a bill that will provide tax breaks for carbon sink forests established for the primary purpose of sequestering carbon.

The Tax Laws Amendment (2007 No. 6) Bill 2007 will make establishment costs for trees in carbon sink forests immediately deductible in the 2007-08 to 2011-12 income years. From then on, establishment costs will be deductible over 14 years and 105 days at a rate of 7% a year.

The deduction is not available for expenditure incurred on trees in a carbon sink forest by a managed investment scheme or a forestry managed investment scheme.

Environment Minister Malcolm Turnbull yesterday described carbon sink forests as a “key element” in the fight against climate change.

"Commercial forests and environmental plantings established since 1990 will remove 21 million tonnes of carbon dioxide from the atmosphere per year by 2010," Turnbull said.

The tax breaks were flagged in this year’s Federal Budget.

Second Reading Speech, Minister for Revenue Peter Dutton