Source: Wealth Creator Magaazine July/Aug 2006

Unfortunately Agri-investments are often overlooked because of perceptions of high risk and low returns. Studies by Australian Agribusiness Research Group demonstrate that reality is the opposite.

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Trees for the forest

Source: Wealth Creator Magaazine July/Aug 2006

Trees for the forest

An investment with a recognised agribusiness (project) funds management operation offers sound investment returns and risk diversification as well as a solution to what may otherwise be onerous tax/wealth creation issues.

Some of the circumstances and strategies in which the tax-effective nature from a forestry product may be beneficial to investors include:

Wealth Creation

  • General tax planning/wealth creation for asset accumulators (investors under 65 years of age)
  • Provide savings for a specific purpose including education funding for children
  • Provide superannuation alternative for younger investors
  • Shelter capital gain or abnormal income
  • Debt reduction including mortgage debt management by converting non-deductible debt into (more efficient) deductible debt

Business Tax Planning

  • Reduce or eliminate company/trust loans to shareholder or beneficiary loans (Division 7A)
  • Reduce PAYG deductions from salary
  • Long service leave (or entitlement) funding for employers (or self employed) by proving a sufficient income level to cover a salary for one year after a 10 year period of investment
  • Cash flow planning by varying the PAYG instalment rate on quarterly PAYG payments

Retirement Planning

  • Provide an effective retirement income stream by investing 10 years prior to retirement and creating a lump some benefit for further re-investment into a suitable annuity/pension investment
  • Self Managed Superannuation Fund tax planning on contributions, earnings and capital gains
  • Dealing with superannuation Excess Benefits through the unique valuation qualities of a plantation investment when held within a superannuation fund structure

Portfolio Management

  • Portfolio diversification into alternative asset class
  • Socially responsible investment option
  • Strong negative correlation to bonds and equities in the risk / return profile

It is important that investment decisions should not be made purely due to tax considerations and should be suitable for the investor's personal circumstances. The investment should meet the usual investment criteria such as:

  • Offering returns commensurate with risk
  • Experienced and respected management
  • Track record/industry experience
  • Suitable investment timeframes with appropriate cash flows, as required by the investor.

Potential investors should seek professional advice to ensure the investment is suitable for their needs.

Disclaimer

Neither ITC, nor any of its directors, employees accept any liability for any action taken by any person that may have relied in whole or in part upon this document or for any errors or omissions contained in it. Neither ITC, nor any of its directors, employee's guarantees, warrants or underwrites the performance or return from any ITC investment.

Written by

Michael Gershkov is Regional Sales Manager for ITC ? Integrated Tree Cropping, one of Australia's largest and most experienced plantation forestry groups who specialise in offering investors and their financial planners a range of managed investment timber projects to use for portfolio diversification and tax planning.