Alternative investments

Are They For Me?

Many Australians look at tax-effective investments at this time of year. Many more have already used this type of investment strategy in the past and have experienced the substantial benefits it can bring.

Although a relatively new asset class in Australia, the opportunity to invest in agribusiness has developed over the past thirty to forty years, the managed agribusiness investment sector is well-recognised and established in the United States. Well over $ 2 billion is invested in the US in this sector each year by individuals through mutual and pension funds.

What are they?

Agribusiness is simply the business of growing crops for human consumption and use. For example: the sale of almond, olive, citrus, table grape and eucalyptus crops are all directed primarily at the export markets. These exports bring in valuable overseas revenue to Australia.

How do they work?

Investment costs (establishment and ongoing) are generally treated as expenses and are tax-deductible against other assessable income. Proceeds from the sale of the crop (upon harvest, either annually or upon maturity) are treated as assessable income, when received. These managed agribusiness investments offer potentially high after-tax returns and act quite differently to the fluctuations of the traded investment markets.

As an example, over 9,000 Timbercorp grower investors-people from all walks of life-have invested in eucalypt woodchip, olives and almonds. This equates to more than $450 million in funds under management.

Investors in these projects do so for a number of reasons: to diversify their portfolios, increase their investment returns, to obtain an income stream, and to make the best use of tax dollars.