Compliance & Reporting Obligations
Registration in the ETS brings ongoing obligations. Understanding what’s required helps you stay compliant and avoid penalties.
Core Obligations
As a registered forestry participant, you must:
- File emissions returns accurately and on time
- Maintain records of forest activities and events
- Report significant events that affect carbon stock
- Keep MPI informed of changes in circumstances
- Surrender units when required (harvest, deforestation)
- Comply with scheme rules in managing your forest
Emissions Returns
What They Are
Emissions returns are formal reports of carbon stock changes in your registered forest. They’re the basis for receiving (or surrendering) NZUs.
Return Options
Mandatory Emissions Return (MER):
- Filed when you want to claim units
- Covers the period since last return
- Required at least once every 5 years
Annual Emissions Return:
- Filed each year
- More frequent unit allocations
- Higher compliance effort
Most forest owners file annually or every 2-3 years depending on cash flow needs.
What You Report
For each Carbon Accounting Area:
- Current carbon stock (from tables or FMA)
- Previous carbon stock
- Net change in stock
- Any events affecting carbon (fire, harvest, etc.)
Filing Process
- Calculate carbon stock for each CAA
- Complete return form (MPI online system)
- Submit by due date
- MPI reviews and processes
- Units transferred to your NZETR account
Due Dates
Returns cover periods ending 31 December. Due dates are typically:
- Mandatory returns: Within specified timeframe after period end
- Voluntary returns: When you choose to file
Late filing incurs penalties.
Record Keeping
What to Keep
Maintain records of:
- Forest establishment: Planting dates, species, areas
- Management activities: Pruning, thinning, pest control
- Events: Fires, storms, disease outbreaks
- Boundary changes: Area additions or removals
- Transactions: Unit sales, purchases, transfers
- Returns: Copies of submitted returns
- Correspondence: Communications with MPI
How Long
Keep records for:
- Duration of registration, plus
- At least 7 years after leaving the scheme
Some records may be needed indefinitely for proving forest history.
Format
Records can be:
- Paper or electronic
- Photos and imagery
- Maps and GIS files
- Correspondence and emails
Organised, accessible records make compliance straightforward. Disorganised records create problems.
Notifying MPI
When to Notify
Inform MPI of:
- Changes in ownership or control
- Changes in forestry rights or leases
- Significant events affecting forest
- Changes to contact details
- Planned deforestation or land-use change
How to Notify
Through MPI’s online systems or direct contact. Specific forms exist for different notifications.
Timing
Notify promptly — don’t wait for the next return. Delayed notification can create compliance issues.
Specific Reporting Situations
Harvest Events
When you harvest:
- Report in your next emissions return
- Calculate carbon stock change
- Under averaging: Usually no surrender if replanting
- Under stock change: Surrender required
Fire or Storm Damage
When adverse events occur:
- Notify MPI promptly
- Apply for TAES exemption if applicable
- Report impact in emissions return
- Document with photos and records
Land Use Changes
If you’re considering deforestation:
- Notify MPI before proceeding
- Understand surrender obligations
- Complete required processes
Ownership Changes
When you sell registered land:
- Complete transfer application
- Notify MPI of ownership change
- Clarify unit ownership with buyer
- Follow through on transfer requirements
Penalties for Non-Compliance
Infringement Fees
For minor breaches:
- Late filing of returns
- Minor record-keeping failures
- Administrative oversights
Fees range from hundreds to thousands of dollars.
Penalty Units
For more serious breaches:
- Failure to surrender required units
- Significant under-reporting
You may be required to surrender additional penalty units.
Prosecution
For serious or repeated breaches:
- Deliberate non-compliance
- Fraud or misrepresentation
- Systematic failures
Criminal prosecution can result in significant fines or imprisonment.
Avoiding Problems
The best approach:
- File returns on time
- Keep good records
- Report events promptly
- Seek help when uncertain
- Don’t guess — ask
Using Professional Support
When It’s Valuable
Consider professional help for:
- Annual return preparation
- Complex situations (multiple CAAs, changes)
- FMA measurement and calculation
- Regulatory queries
- When you’re time-poor
What Consultants Do
Carbon compliance consultants:
- Prepare and file returns
- Maintain records on your behalf
- Advise on complex situations
- Liaise with MPI
- Monitor regulatory changes
Cost vs Risk
Professional fees are generally modest compared to:
- Penalty costs for non-compliance
- Value of units involved
- Time cost of DIY compliance
For most forest owners, annual professional support is worthwhile.
Emissions Rulings
What They Are
An emissions ruling is a formal, binding decision from MPI on a specific ETS question relating to your forest. Unlike general guidance, a ruling provides legal certainty for your particular situation.
When to Consider a Ruling
Emissions rulings are useful when:
- You have an unusual or complex situation
- General guidance doesn’t clearly answer your question
- You need certainty before making a significant decision
- The stakes are high (large areas, substantial unit values)
- You want protection from later reinterpretation
Examples:
- Whether specific vegetation qualifies as “forest”
- How to treat an unusual species mix
- Eligibility of land with complex history
- Application of rules to an edge-case scenario
The Process
- Prepare application — Describe your situation and the specific question
- Submit to MPI — Through their formal rulings process
- Pay fee — Rulings incur application fees
- MPI investigates — May request additional information
- Ruling issued — Binding decision on your specific question
Important Considerations
Binding nature:
- Rulings are binding on MPI for your situation
- They apply to the facts you presented
- If facts change, the ruling may not apply
Limitations:
- Cannot request review of a ruling outcome (unlike other MPI decisions)
- Rulings take time — not for urgent situations
- Costs can be significant for complex questions
Professional support: Most applicants engage a lawyer or specialist advisor to prepare ruling applications. The quality of your application affects the outcome.
When NOT to Use Rulings
- For straightforward questions (use MPI guidance or ask directly)
- When you need a quick answer
- For hypothetical scenarios
- When general guidance clearly applies
MPI Audits
What They Are
MPI may audit your registration and returns:
- Check accuracy of reported information
- Verify forest meets requirements
- Review records and documentation
How to Prepare
Good records are your best preparation:
- Organised documentation
- Evidence supporting returns
- Responsive to requests
If Issues Arise
If audit reveals problems:
- Respond promptly and honestly
- Correct any errors
- Work constructively with MPI
- Seek professional or legal advice if needed
Key Takeaways
- Returns are mandatory — file on time to claim units
- Records are essential — keep organised documentation
- Report changes promptly — don’t wait for the next return
- Penalties are real — non-compliance costs money
- Help is available — professional support is worthwhile
- When in doubt, ask — MPI prefers questions to mistakes