ATO rulings clarify offset credit taxation

The ATO has released two new rulings on the taxation of NSW biodiversity credits.

Upfront capital gains tax liabilities on credit creation are here to stay, credit retirement rules have also been clarified and an accurate valuation remains crucial.

The Rulings

The rulings are available on the ATO website:

• For landowners entering into a BSA: Class Ruling CR202615 – details biodiversity stewardship agreements taxation arrangement

• For developers: Class Ruling CR202616 – details biodiversity stewardship agreements established to satisfy development approval conditions for an activity, development or clearing on an Impact Site held on capital account

Accurate valuation is crucial

Across both new rulings, establishing a proper market value based on the credits involved and the taxpayers situation is crucial.

BOS credits trade within individual markets. There are 1000's in the scheme most are illiquid, specialised and rapidly evolving.

Many credits come with large nominal values that reduce significantly once the trading context is properly taken into account. Using raw information from BCF quotes or government dashboards is the surest way to pay too much tax.

Speargrass can help

Speargrass has been working with developers, landowners and their valuers and advisors to provide independent assessments of market value, driven by the best available market evidence and sound methodologies.

If you or your advisors are navigating these changes and need valuation input, please get in touch.