Carbon markets have been established around the world to help mitigate the effects of climate change and achieve net zero targets set by the public and private sectors. Australian agricultural landowners have the exciting opportunity to participate in the Australian carbon market at the project level through carbon farming to create further prosperity in their farming enterprise and be part of solving the climate problem.
This paper provides some background on the Emissions Reduction Fund and the types of carbon farming projects that can be undertaken in Australia. It considers the key commercial and legal considerations for Australian agricultural landowners when entering into a carbon farming agreement with a carbon farming project developer to undertake a carbon farming project on their land.
The paper also addresses the key taxation implications associated with carbon farming, including the taxation of Australian Carbon Credit Units (or “ACCUs”), the ability to write-off associated capital expenditure and the impact on primary production income and small business CGT concessions.