Proposed Shake-up Threatens Non-Timber MIS Investment

Sept. 8, 2009 - PRLog -- Proposed Shake-up Threatens Non-Timber MIS Investment

Independent agribusiness MIS researcher Australian Agribusiness Group (AAG), believes the removal of upfront tax breaks for non-timber agricultural managed investment schemes
(MIS), as proposed by a parliamentary committee last night, will severely reduce
investment into non-timber MIS and put it at a distinct disadvantage to other farmland
investment options.

The committee’s primary recommendation, born from an inquiry into the collapse of
Timbercorp and Great Southern earlier this year, recommends the government amend the
existing tax arrangements for non-timber MIS investment to ensure deductions are “only
permitted to be offset against future taxable income from the same MIS”.

AAG Director Tim Lee claims the proposed tax changes would severely diminish the
attractiveness of non-timber MIS. “Upfront tax deductions have played a critical role in
helping to overcome perceived agri-investment risk, related to the long-term nature of the
investment,” Mr Lee said.

“If the tax benefits are removed, we are likely to see many retail investors move away from
non-timber MIS, which often takes up to six or seven years to start producing net positive
income.

“This will severely reduce inflows into the sector, potentially putting regional jobs at risk,”
he said.

According to Mr Lee, implementation of the committee’s recommendations will also put nontimber MIS at a major disadvantage to competitor farmland investments.

“At present, both MIS and non-MIS investments can cover losses in one year by offsetting
them against others. This will no longer be the case for non-timber MIS under the proposed
legislative changes.

“While non-timber MIS investors may simply shift their focus to timber, it is more likely that
we will see an overall decline in inflows across the MIS industry as a whole,” he said.

- Ends -

For more information or to arrange an interview with Tim Lee please contact:

Sasha Alphonso
Group Marketing & Communications  Manager
Australian Agribusiness Group
T: 03 9602 6501
M: 0402 561 848
E: salphonso@ausagrigroup.com.au

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The Australian Agribusiness Group provides leading expertise in research, investment management and agribusiness consulting nationally. Please visit: www.ausagrigroup.com.au

AAG's sister company is AAG Investment Management
http://www.aagim.com.au/