Good morning all,
This is my first post so bare with me,
Im 26 and i want to start investing in property, like most people i don’t want to be sitting in this same desk in 5-10 years from now.
Anyway i was wondering if anyone out there can give me any info on investing in Tree plantation, I have been approached by a client of mine to invest in it but not knowing about it, makes me a bit nervous. Look forward to your replies.Thanks
GumpHey Nathan,
I’m afraid I can’t be of any real value here, but I do want to warn you to do your homework first. A girlfriend’s husband invested in “trees” some years ago, and although it was believed that money would be made on the exercise, not only did did they NOT make so much as a even few woodchips out of it, but went totally bankrupt to boot!!! [bawl]
That’s not to say it was the “trees” fault, just the apple that fell from it; the guy was just like his dad, always went into stuff blindfolded!!!
Do some research first before you make any decisions.[blink]
Cheers,
Jo
Hi Jo, it has been a long time.
Nathan, what kind of trees.
I have some Paulownia and so far so good. Although I am still waiting on returns, they take 8-10 years
Byronent
Adelaide SATo be honest they are tax based scheme and the trees have no real valyue for the first 10 years, after that they have marginal value.
Keep in mind for some products offered as much a $6000 from every $10,000 invested goes to the promoters pocket. Also whilst some programs suggest you own the land your trees are planted on the land is worth less than $1000 per hectare and you effectively have a 10m x 10m patch with 6 trees on it.
As mentioned above there have also been problems with promoters going broke and leaving trees to die.
That being said if you are high income earner and you have exausted all traditional means of managging yourself into a better tax position then trees are worth looking at.
Don’t confuse this with investing in real estate.
Check the company with ASIC and the ATO. Get a privateruling from them. I hada coleague who bought $30K worth based on the tax deduction and was pleased to pay no tax that year. Three years later it was dissallowed and she had to repay the tax.
Take care,
Simon Macks
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Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Simon has made a very good point…it is very important to note that you do not buy these as an investment or to make money as such…you buy them to shift a tax problem from one year to another.
As Simon mentioned the tax rulings on them can be revoked (or in some cases where questionable to start with) and then you are in a world of pain.
There is one well known scheme that unravelled and the tax dept were actually pretty kind to people and wrote letter saying “we won’t charge you penalty interest on the amount you had claimed on the investment but you will need to send us a cheque for $300,000 within 7 days”
I use Queensland Paulownia Forests, approved ruling by the taxation department.
You get a lease on a patch of grass, half acre I believe that holds about 51 trees on it. Matures in under ten years.
Yes there are a lot of scamsters in this industry and just make sure you do insure your trees against fire.
Byronent
Adelaide SANote: Tax Rulings can be recinded if the operator fails to carry out all duties as orginally set out or goes into receivership.
Hi NATHAN17,
I went to a seminar prior to buying an investment property and it was based on investing in trees, due to some inevitable future major deficit in paper. The main focus during the seminar was the ‘tax cuts’. Most of the audience were high roller/CEO executives. Then there was me sitting in the back with a protein shake and a track suit. The ‘investment’ pitch was no different to any property seminar over the past 5 years where at the end you’re coerced into signing up for a property. Needless to say, I left before the seminar ended. The thing I want to point out is that the presenter himself after singing all the virtues of this investment highlighted again and again how it would save tax. I hope this has been of some help.
Cheers,
Gatsby.Nat R they still have the ruling and it is not rescinded. You should check them out.
Gatsby, the tax incentive are great as tree growing is considered as a primary production activity.
I am an example of 100% tax deduction, low operating costs of around $1000 a year and a return yet to be determined.
Byronent
Adelaide SAHave you considered investing in Indian Sandalwood Plantations? These seem to be doing extremely well due to the shortage of supply. There are some plantations up in the Kimberleys-North WA.One of these organisations offer deals in plantations with very good returns. However the timespan is 15 years. They also listed on the ASX recently. code TFC
Paulownia is 8-10 that is the limit for me.
You can’t predict what the supply will be like in 10-15 years.
Byronent
Adelaide SAThanks everyone for your info, The guy who is telling me about this is away for a week so i really don’t know much more untill his back. I will take on the advice.
Thanks
Nathan
As others have pointed out, any “scheem” that has as main purpose save tax will be disallowed by the tax man, now or any time in the future as it has already happened numerous times.
A ruling a few years old like the promoters will show you, means absolutley nothing.May God prosper you always.[biggrin]
MarcHi Byronet,
The point that I was trying to highlight was that saving tax is great. For some people saving tax may not be a priority over CG, cashflow, return on investment, etc. I’m not bagging the scheme. If it works then that’s all that matters. I’m just trying to highlight what my experience (what little of anyway) of investing in trees has been to make Gump aware of. That aside, it sounds like you’re onto a good thing. Well done!
Cheers,
Gatsby.Here in South West Vic tree companys have been very industrious of late purchasing good farm land, stripping it of all assetts and planting it out in various breeds of trees. Around 40 dairy and grazing propertys have sold in the last 18 months. What this has done of course is push up the values and asking prices of any new listings.
These companys have deep pockets.Midway Plantations P/L, have clearing sales advertised in todays paper at 3 farms later in the month.I believe they are affiliated with Maquarie investments. I can tell you from seeing first hand that these plantations have been set up in a professional way and appear to be managed well. Having said that I would not consider investing in them. Managed investments I see as investments for the masses and I think of them as lazy investments or white bread investments as Robert Kiyosaki calls them. No doubt though, some of these could be good investments.I purchased a dairy farm before Christmas and have since had in revalued. It is valued at 180k more than my purchase price and I havn,t done anything to it yet!
If you check, I posted a while ago a, ‘Are farms worth a look’, and got no replys!
I know it it’s not so glamorous but it can be well worth it at the moment, thank you very much…
Shawn
Hi, on a tangent..
A financial advisor friend of mine suggested I was better off buying the stock of these companies because after 10 years you still own the assetts that the company owns.. When you invest in allotments its good in certain tax scenarios but after 10 years they redevelop the land and sell it to the next investor.
I took his advice 2 years ago and make a 300% return in Timbercorp and 250% on Great Southern Plantations respectively..
So I’m a big fan of agribusiness in general. I think with the diminishing old growth timber resources it makes a lot of sense.. but at the same time I’d much rather own the stock..
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