CPA Australia has released a guidance note to provide members with advice for clients about agribusiness managed investment schemes (MIS).
The guidance note outlines key points CPA members should take into account when advising on agribusiness MIS.
It is expected that Australians will invest a record $1.3 billion in agribusiness MIS in 2007, according to research house Adviser Edge.
"When advising on specific agribusiness products, the onus is on financial advisers to show they have considered their client's needs and that these can be met by the agribusiness MIS selected," CPA Australia financial planning policy adviser Kath Bowler said.
Bowler said the review of the merits comes at an ideal time as there have been changes proposed to the tax treatment of a number of these schemes.
Due to a change in interpretation of the law by the commissioner of taxation, investors in non-forestry MIS will no longer be able to claim an up-front deduction for the cost of their investment on the basis that it is a business expense.
"The proposed changes are significant in that the immediate tax deductibility of an investment has been marketed as a key feature of some non-forestry MIS. And while tax should not be the primary driver of the investment, it is usually an important consideration," Bowler said.
In contrast, the Federal Government recently legislated that investors in forestry MIS will continue to be able to claim immediate deductions for investment in such arrangements from 1 July 2007, she said.
"Investors will no longer be required to contend they are carrying on a business of investing in such activities to obtain tax deductions for their investment," Bowler said.
The guidance note is the fourth in a series developed by CPA Australia. The preceding notes focused on advice provided on SMSFs, aged care and reverse mortgages.
