Focus attention on profits, not tax

INVESTORS should concentrate on making a profit rather than minimising tax, says Newman Partners partner Glenn Trinick.

Mr Trinick said, in many cases, investors suffered from ‘tunnel vision’ the minute the topic of tax effective investments arose.

“Reducing tax shouldn’t be the driving factor for making investment decisions,” Mr Trinick said.

“With Ralph reforms changing the criteria for such investments, there isn’t the tax advantage there used to be,” he said.

Norgard Clohessy Equity managing director Ken Richards said it made sense to invest in a product that had an established, large market.

“You need a ready market and there is no doubt risk increases when you are creating a market,” Mr Richards said.

“You also have to make sure supply does not outstrip demand.

“For instance, ten years ago, the mango market was flooded and the price fell dramatically.”

However, a product such as macadamia nuts which seems to be at the niche end of the tax effective investment market, still performs well compared to low-demand products such as tea tree oil.

Mr Trinick said many advisors seemed to believe timber products were a sound investment.

“Even then there’s never a guarantee of returns – even blue gum plantations can fall victim to a bush fire.”

“As immediate advantages become less, the only projects that will succeed will be the ones with intrinsic value – the dodgy ones will fall to the wayside,” he said.

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