Report slams tax schemes

ONLY two of WA’s plethora of rural tax investment schemes have good prospects according to a scathing report by Van Eyk Capital.

The report recommended only five out of seventy-three Australia-wide schemes raising funds for ventures ranging from bluegums to vineyards and olives.

The $25,000 report concluded that only one of nineteen vineyard projects, no olive projects and just two of fifteen bluegum ventures were acceptable investments.

An almond project also was considered viable.

No South West vineyards or olive farms fitted the bill the report said.

The two investment schemes in WA which demonstrated good business management and planning were the Integrated Tree Cropping Limited and Australian Plantations Timber.

Van Eyk Capital managing director David Marshall said many schemes were expensive, extracted unfair profit margins, were based on optimistic projections and had technical flaws such as the lack of a reliable water supply.

He said that some promoters were reaping up to seventy cents in the dollar in management fees and fees charged bore no relation to the actual cost of the project.

Mr Marshall said the reason why the schemes had been so successful was because of “gloss marketing”.

He said many investors were attracted by the nature of growing something because it gave them a warm fuzzy feeling which in the end could cost them dearly.

He said the selected investments were not chosen because they were perfect but because they had demonstrated they could grow, promoters had management expertise and there was a market for the product.

Mr Marshall said while the wine industry had demonstrated strong growth, few players would have contracts in place to ensure a return.

In some cases the assumed prices of the crop were also way of the mark, he said.

Financial adviser Garvan Financial Planning Authorised Representative Terry Lee said it was important to not mistake an Australian Tax Office product ruling as an endorsement of the scheme itself.

“All of these projects or similar tax effective schemes, even though approved by the Tax Office as a far as rulings are concerned are not endorsed by the ATO,” Mr Lee said.

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