If the moderator dumps this post I’ll understand..
A lot of agribusiness schemes get a 100% tax deduction in the first year, taking advanatge of primary producer tax concessions and ther like.
Therefore is the following legal?
If a top marginal tax payer borrows to say, buy $50000 worth of allotments in eucalyptus trees near the end of the FY, I assume then they will get in effect, up to a 47% disount based on the reduced income and a big tax rebate.
But given that you *borrowed* to make this investment, the tax advantages are the same as negative gearing a property. Eventually your investment will return a profit, but in the meantine you can claim any reasonable costs in making the investment.
So.. can you then claim the interest on that $50000 as well?
Its kind of like double dipping, where, unlike property you have little to no cashflow for 5-8 years. (Some schemes do give you some degree of cashflow however).
curious..
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Yes, the interest on the borrowed funds are deductible. I have recently invested in olives and done the same thing. In fact the amount borrowed for this was $47k, P&I taken over 7 years.
With the olives, the cashflows for the investment, included a $26k claimable loss in the first year (not including the interest component of the funds borrowed).
James
Some of these schemes are very possible – however I would ensure that any that I invested in had obtained a Tax Office ruling, or you will find that all tax deductions are disallowed, and you get to pay a nice little (not) fine as well!!
Cheers
Mel
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