Tax products back again

TIMBER and grape investment products have come up trumps, offering improved quality and sound investments, a new ratings industry survey shows.

However, the Australia Tax Office still remains sceptical, warning investors once again to be wary of the new spate of end of year offerings.

Research released this week by Adviser Edge Investment Research shows that timber and grape products led by Tasmanian public company Gunns Ltd, all rated high for 2003.

Making up the group of the Adviser Edge Top 10 are two WA-based wine projects, from Palandri and Watershed Premium Wines, each with four stars.

Gunns Plantations’ veneer and pulpwood projects and the SAITeys McMahon AgInvest’s Treviso Table Grape project were the three products to receive four-and-a-half-stars this year.

Adviser Edge managing director Shane Kelly said the ratings generally reflected a general improvement in the quality of the projects.

“The industry has taken stock over the last two years, improved the quality of their offerings and now stands ready to lift funds flows into the sector for the first time in four years,” he said.

“The retail market is showing a clear preference for timber projects with upfront and deferred fees.

“As a consequence we are seeing other project managers move to meet market expectations, which means fewer projects with ongoing management fees.”

The conclusion drawn from Mr Kelly is at odds, however, with that of Tax Commissioner Michael Carmody.

Mr Carmody said people should remain wary of any product or scheme that promised big tax breaks as a major selling point. “Investors should also be wary of satellite seminars or ‘wealth creation’ seminars that offer to reduce your ‘tax burden’ or that market investment schemes offering small cash outlays and large tax deductions,” he said.

The ATO has singled out a number of schemes currently in the market including those involving the funds transfer to offshore tax havens, superannuation-based schemes offering access to funds before retirement age and prepaid service warrant schemes currently being promoted by lawyers and accountants.

If nothing else, the ATO actions have lead to a rationalisation in the industry, which Mr Kelly said he believed was coming to an end.

 “The drop off in projects making it to market has been extensive, with all sectors experiencing a decline in numbers,” he said.

“Now we have a very sustainable number of project managers who will continue to diversify their product offerings.”

Olive products in particular have been scrutinised by the ATO with only four such projects being released so far after receiving a product ruling.

This compares with 12 last year.