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Forest Owner Commodity Levy

From the 1st January 2014, a compulsory Forest Owner Commodity Levy ("Levy") of 27 cents per tonne was introduced on all products sourced from trees in plantation forests in New Zealand.

What is the levy?

As discussed in the December 2013 Wood Matters, the levy is a forest growing levy and applies to the commodity harvested by forest owners in New Zealand. The levy applies to all products sourced from trees in a plantation forest. This includes logs, posts, poles, forest waste, binwood, hog fuel and woodchip, exported or processed in New Zealand. Woodchip produced as a by-product from sawmills is excluded, as the levy has already been applied at an earlier stage to the raw material received at the mill gate. The levy does not apply to Christmas trees, domestic firewood or bark. Plantation forest is defined as planted forests and forests that have grown as a result of a planted forest such as wildings and regeneration. Production from planted native forests will be levied while production from natural native forests will not be levied.

The levy is applied on a tonnage basis (if a transaction is in m³ or JAS m³, then a 1:1 conversion will be used i.e. 1 JAS m³ = 1 tonne) to all such material and the point of application of the levy will be where this volume of material is being assembled prior to the next stage of the wood use; i.e. either at a domestic processing facility or at the wharf. The measurement at these points was selected as being the most practical option as data was already being collected and agreed between parties. The levy in year one (i.e. 1st January 2014 to 31st December 2014) will be 27 cents per tonne, with the maximum levy rate over the six years of the levy not to exceed 30 cents per tonne.

What do I need to do as I am currently harvesting my forest?

If PF Olsen is your manager, it is acting as agent on your behalf. PF Olsen will be identified as the manager of the levied product and will receive an invoice from the Forest Growers Levy Trust. PF Olsen will then deduct the levy from your harvesting revenue.

I have sold my trees under a stumpage or cutting right agreement. Am I liable to pay the levy?

You are liable to pay the levy as under the Commodity Levies (Harvested Wood Material) Order 2013 Section 3 "the forest owner means the owner of the trees whether or not the cutting rights have been granted to another person".

This obligation could be contractually passed on the stumpage or cutting right purchaser, but this needs to be clearly documented in the sale and purchase agreement.

However, if the sale contract is clear that the trees themselves have been sold (such as under a Forestry Right), then the owner of the trees is the purchaser and it is responsible for the levy and not the prior tree owner.

I sold my trees under a stumpage or cutting right agreement prior to the 1st January 2014 and the contract is silent on the levy. Am I liable to pay the levy?

If the trees were harvested and the logs sold and delivered prior to the 1st January 2014, then no levy is due. However, if the trees are being harvested after the 1st January 2014, then under the Commodity Levies (Harvest Wood Material) Order 2013 you are, as the forest owner, liable to pay the levy as the logs are harvested and delivered to the point of sale. This is despite the fact that this is being done by the party who purchased the stumpage or cutting right.

Where can I find more information about the Commodity Levies (Harvested Wood Material) Order 2013?

Further information about the levy can be found at Forest Voice.