Voluntary Exit Grants Program frequently asked questions

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Can a grantee enter into a contract or arrangement whereby the grantee purchases wood (logs) from a native forest grower and delivers it to their own premises for processing?

A grantee may purchase wood (logs) from a grower but is not permitted to harvest the logs. Purchased logs may be transported by the grantee in their own trucks to their premises for processing. Grantees may not transport or sell purchased logs to a third party for processing at a sawmill or chipmill.

What is the purpose of the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program?

The Australian Government has committed up to $45 million to help Tasmanian public native forest harvest, haulage and silvicultural contractors adjust to the industry downturn and to the reduced scale of public native forest harvesting, through voluntary exit assistance to eligible contracting businesses. It is expected the reduced scale of harvesting will result in the order of 1.5 million fewer tonnes of wood being harvested in Tasmania.

What support is available?

Exit grants of up to $3 million (GST exclusive) are available for eligible native forest harvest, haulage and silvicultural contracting businesses currently operating in the Tasmanian public native forest sector. Applicants are asked to nominate an amount to exit the industry.

How and when can I apply for assistance under the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program?

The Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program opened for applications on 26 October 2011 and closed on 24 November 2011. Applications had to be received by 5pm Australian Eastern Daylight Time (Canberra time) on 24 November 2011.

Applications are now closed.

If I'm successful, when will offers be made?

The Advisory Panel for the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program (IGACEP) met on 19–20 December 2011 to consider 98 applications for the program. A diverse range of applications was received for the program requiring the panel to ensure all applications are dealt with fairly.

In order to complete its assessment of applications the panel has requested further information and verification of information before it can finalise its recommendations on the offer of grants under the program. Almost 75 per cent of applications were requested to provide further information or verification of information submitted and this affected the panel being able to finalise its consideration of applications. The advisory panel sought independent financial assessment of applications.

The IGACEP panel convened on 1 and 2 February to consider the results of financial analysis and develop recommendations on grant offers. The Advisory Panel reconvened on Tuesday 7 February to finalise recommendations for successful grant applications. A report to the delegate outlining the panel's recommendations has been finalised. The delegate made a decision that 61 applicants will be offered voluntary exit grants with a combined total of $44,019,622.76. All eligible applicants will be made grant offers.

Officers from the Department of Agriculture, Fisheries and Forestry called all applicants to notify them of the outcome. All applicants, including those applicants who did not meet eligibility requirements were also notified in writing.

Are IGACEP grants taxable?

Yes. The tax impact will depend on individual financial circumstances. Grantees are advised to seek financial advice on their tax position. Section 13 of the IGACEP guidelines addresses this issue.

What is the eligibility criteria under the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program?

To be eligible to apply for a voluntary exit grant a contracting business, must have:

  1. not received a grant under the Tasmanian Forest Contractors Exit Assistance Program 2010–2011

  2. an ongoing contract(s) or ongoing arrangements to conduct contracted operations in Tasmanian public native forests at 24 July 2011 and can provide evidence of that contract or arrangement and

  3. under an ongoing contract or an ongoing arrangement, been conducting harvest, haulage or silvicultural operations in Tasmanian public native forests. This means that more than fifty percent of the native forest operations (including private native forest and excluding plantation forest) of a business must be in public native forest operations in at least one of the following four financial years: 2007–08,  2008–09, 2009–2010 or 2010–2011

  4. at 24 July 2011, not have been sold (written offer of a sale exchanged but not necessarily settled), or be under receivership or be in bankruptcy administration

  5. an Australian Business Number (ABN) held at 24 July 2011, and

  6. provided information requested in the application form including copies of tax returns, verified financial information and information on business arrangements related to the contracted operations.

Please refer to the program guidelines for full details of business eligibility criteria.

I am subcontractor, am I eligible?

Subcontractors in the Tasmanian public native forest harvest, haulage or silvicultural contracting sectors, were able to apply for assistance under the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program if they meet all the eligibility criteria.

Do I need to include a letter from the principal, contract holder or subcontractor to demonstrate my ongoing contract or arrangement?

Where you don't have a written contract, a letter is required from the principal, a contract holder or subcontractor, detailing the ongoing nature of the contract and start and end dates of that contract.

Where you don't have a written arrangement, a letter is required from the other party to the arrangements setting out that the arrangements were ongoing at 24 July 2011.

Please refer to the application form and guidelines for details on what should be included in the letter required.

I am a sawmiller, am I eligible?

Under the Intergovernmental Agreement, sawmillers will be supported under a program of at least $15 million. You can seek more information from the Tasmanian Forest Support Information Line 1800  648  075.

I am roading contractor, am I eligible?

This program covers haulage, harvest and silvicultural contractors in Tasmanian public native forest operations. Roading and other contracted operations such as weed control, forest inventory activities, forest fuel reduction, firebreak maintenance and fire control operations are not eligible for this program.

Are businesses under receivership or in bankruptcy administration eligible?

To be eligible to apply for a voluntary exit grant a contracting business, must have at 24 July 2011, not be under receivership or be in bankruptcy administration. Contracting businesses that entered receivership or bankruptcy administration prior to 24 July 2011 are considered ineligible for assistance under this program.

Where a business partnership exists and one partner is in bankruptcy administration is the remaining partner eligible to apply under the IGACEP?

If the bankruptcy administration was of a general partner and occurred prior to the 24 July 2011 and the partnership agreement does not contain specific provisions relating to bankruptcy administration, then the partnership has dissolved upon the bankruptcy of the partner. In this instance the business is not an eligible business under the terms of the program guidelines.

Are businesses who received an exit package under the Tasmanian Forest Contractors Exits Assistance Program Eligible?

To be eligible, a business must not have received a grant under the Tasmanian Forest Contractors Exit Assistance Program 2010–2011.

In what period do I have to have had a contract, quota or delivery arrangement to be eligible?

To be eligible for exit assistance, a business must an have arrangement that existed prior to 24 July 2011 and were still active at 24 July 2011 that were with a principal, a contract holder or a subcontractor to a contract holder, and under which arrangements the business may be directed to undertake harvest, haulage or silvicultural operations in Tasmanian public native forests.

Will the assistance under the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program be available nationally?

The assistance in the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program will be available only for public native forest activities conducted by a forest contracting business in Tasmania. Assistance under this program will not be available for businesses operating in other states. Contracting businesses exiting under this program will be required to exit from their public native forest operations in Tasmania and not re–enter the forest industry nationally for a period of 10 years.

What are the restrictions on the Nominated Individual(s) of successful grantees under the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program?

The nominated individual(s) of contracting businesses exiting under this program will be required to sign a Deed of Undertaking under which they pledge to exit from their public native forest operations in Tasmania and not be able to re–enter the forest industry nationally for a period of 10 years except to the extent of existing contractual arrangements in the mainland sector or the Tasmanian plantation sector. Re–entry means to buy, start or acquire another forestry business and/or forest contract and/or arrangement.

I have more than one business; can I apply for more than one grant?

If you have more than one business with separate Australian Business Numbers (ABN), an application for exit assistance can be submitted for each business. Separate application forms need to be submitted for each business.

What documentation do I have to provide in the application?

As part of your application, you will be asked to provide documentation showing:

  • proof of business registration (ABN registration)

  • details of all business owners, directors and partners including copies of business documents such as company statements setting out this information

  • detailed information on the forestry machinery owned (including machinery which is the subject of a financing arrangement) by the business

  • copies of business tax returns for 2009–2010 tax year and, if available, for 2010–2011 year – otherwise verified financial statements (income statements, interest expenses and balance sheets) for the business for 2010–2011 are required

  • copies of income statements, interest expenses and balance sheets for the business for 2009–10 and 2010–2011 financial years verified by a qualified accountant being a certified practising accountant (CPA) or a chartered accountant (CA), whether or not copies of tax returns have been provided for those years

  • business activity statements for 2009–2010 and 2010–2011 financial years

  • copies of ongoing contracts held with a principal, a contract holder or a subcontractor to a contract holder – see section 4 above. These contracts must show start and end dates for the contract to show that the contract was ongoing at 24 July 2011. Where applicable the contract number should be provided. Where a copy of an ongoing contract is not available, a letter from the principal, a contract holder or a subcontractor, detailing the ongoing nature of the contract and start and end dates of that contract are required;

  • copies of ongoing arrangement(s) – see section 4 above. Where the ongoing arrangement(s) are not written, a letter is required from the other party to the arrangements setting out that the arrangements were ongoing at 24 July 2011

  • details of the business's employees

  • details of funding received under other Commonwealth forestry grants programs and

  • agreement of all business partners/owners/directors to the application.

How will applications be assessed?

Applications will be assessed on the basis of merit criteria (as listed in the guidelines) by an advisory panel. This is a competitive grants program. The decision maker has the discretion in determining whether or not a particular applicant receives funding and may or may not impose conditions on the grant.

If the department considers that proof of the applicant's eligibility and/or merit has not been provided, the department may request the applicant supply further information within five working days. The five working days will commence from the date that the applicant receives the request via registered post.

When will I be informed if I am successful for funding?

All applicants, either successful or unsuccessful, will be advised of the outcome of their application in writing. Offers were made to successful applicants in February 2012.

How will I be paid if I am successful?

If you are successful, exit assistance will be made in two payments to your nominated bank account upon presentation of a tax invoice for each payment.

The first payment will be 75 per cent of the total approved amount and will be made on the signing of the Funding Deed and the execution of a Deed of Undertaking.

To receive the second grant payment of 25 per cent of the grant amount, the grant recipient must be able to demonstrate that:

  • the business has provided an exit strategy

  • the business has met employees' entitlements such as wages, superannuation payments, long service leave, recreation leave and statutory redundancy payments. Following payment of the first grant amount, a form will be provided to successful applicants, for them to complete setting out the names of employees and entitlements paid. This will need to be signed by a qualified accountant and provided to the department before a second payment will be made

  • the business's forestry machinery will not be used by the grantee and/or Nominated Individuals in the forest industry nationally for 10 years except to the extent of existing contractual arrangements in the mainland sector, the Tasmanian private native forest sector or the Tasmanian plantation sector. Sale of this machinery is permitted unless there are obligations not to dispose of assets in relation to specific items of machinery funded under the Tasmanian Community Forest Agreement Industry Development Program (see below) and

  • the business has terminated any contracts or arrangements to hire out or lease out its forest machinery in the Australian forestry industry and the business and/or Nominated Individuals will agree not enter in to new contracts or arrangements to hire out or lease out forest machinery of the business in the Australian forestry industry within 10 years.

When will the details of successful grantees be made publicly available?

Under the Commonwealth Grant Guidelines, an agency must publish information on individual grants on its website no later than seven working days after the funding agreement for the grant takes effect.

Payment of the first milestone including due diligence by the department and clearance of funds into the grantee's bank account can take up to 14 working days. It should be noted that payments will not be processed on public holidays.

It should be noted that IGACEP grantees have up to 28 calendar days from the date of receipt of the deed to return the signed deed to the Commonwealth after which the Commonwealth then signs.

The funding agreement for the grant only takes effect upon the signing and execution of the Funding Deed by both parties.

How can I find out more information about the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program?

For more information on the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program email the Program Secretariat or phone 02 6272 5079.

Where can forest industry workers get information on services available for them?

Tasmanian forest industry workers can call the Tasmanian Forest Support Information Line on 1800 648 075 for more information about the services and payments that may be available to them.