Raising funds a taxing task

BIG changes to tax laws have failed to change peoples’ tax planning habits, with many leaving decisions on investment in tax effective schemes until at least the second half of the year.

The wine industry is one that will be watching just how much of this reluctance to invest earlier in the year is related to tax planning, or whether a new wave of wine-processing offers will continue where vineyards left off.

The biggest of these, Palandri, is also a pioneer in the tax-effective market, the first to pitch to small investors the idea that owning the winery and label was going to be more important than growing grapes.

A flood of warnings about a glut of grapes has helped support the Palandri proposition, as well as prompt others to follow suit with fund raisings for the Margaret River area.

All in all, some $150 million in commitments is being sought by three Margaret River newcomers.

Palandri’s second stage is appealing for $88 million, with a new prospectus out this week, after raising just $8 million of this target in the first half of the year.

Settlement 22 wants $37 million and Watershed is seeking $25.6 million.

“To be honest, it’s been a tough year,” said Cedric Williamson, chief executive of the Settlement 22 project.

The project has won an extension for its prospectus but Mr Williamson is not expecting the offer to fill before it closes in March.

“It is unlikely we will fill the prospectus this year, so we are likely to have stage two next year,” he said.

At this stage, he is hoping to do better than the minimum 384 interests required from the 2235 interests available in Settlement 22, allowing 20 hecatres of vineyards to be planted in support of the wine production which is already going ahead.

“People think tax planning is still done at the end of the financial year,” he said.

“I think people have been pushed dealing with the BAS and GST, it has overwhelmed them. They have not been thinking about tax planning until now.”

Watershed project manager Geoff Barrett is much more optimistic about his project’s chances of hitting subscription targets before it closes on June 23.

“I think we will get the lot,” Mr Barrett said.

“That is based on the major sellers we have been able to put in place.”

He is talking about the distribution networks among financial planners, with the east coast being the major target because so many of WA’s investors have been burned by bad experiences with the tax office.

In addition, using the Margaret River name is an important boost in the marketing game, not just for wine but for capital as well.

“You don’t have to sell Margaret River to Australia, it has already sold itself,” Mr Palmer said.

“You already have a leg in, most (of the tax effective market) are aware of Palandri, that has been a useful measuring stick for us.”

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