Investment in forestry can be a panacea for events triggered by fund inflows into superannuation prior to June 30, an agribusiness chief has claimed.
Advisers should consider the tax deductibility of forestry managed investment schemes (MIS), Macquarie Alternative Assets Management (MAAML) director Anthony Abraham said.
Personal capital gain tax triggered by selling assets in order to put the proceeds into superannuation can be offset by investing in forestry MIS.
And self-managed super funds (SMSF) with investable funds can also use it as a clever asset.
"In the current environment where planners are sticking their heads up out of the books and thinking: 'phew, that was good, I've got everybody into their SMSF, and I've sold a mountain of assets. What can I do in the couple of days before June 30?' they should be looking at the capital gain and allocating SMSF investable funds," Abraham said.
Uniquely, the Macquarie Forestry Investment 2007 offers investment in both the trees and the land on which the trees are grown.
SMSF can invest in plantable square hectares worth $5450 at the discounted sum of $1950 through the Macquarie Timberland Unit Trust.
"It's like a zero coupon bond - because it's so illiquid I have to increase my discount rate," he said.
Abraham calls this virtual leverage as an SMSF is not gearing up, but is getting the benefit of leverage.
When the land is sold at end of the 11 year MIS term, investors receive a return on their investment commensurate with $5450 plus the proceeds of the escalated land value.
The Macquarie Forestry Investment 2007 closes on June 30.
As previously reported, Macquarie is in discussion with the Australian Tax Office to offer peace of mind to investors in its Macquarie Almond Investment 2007 by providing drought insurance cover.
