Smart Tax Planning within Rach of Most Australians

The goal of tax planning is to create wealth by generating more out of your income, and reduce the amount being taxed at your highest marginal tax rate. If you thought this type of planning was reserved for the wealthy, you should think again - tax planning is within everyone’s reach.

An increasingly popular solution is to combine the benefits of tax planning with a diversified investment, such as a 100% tax deductible agribusiness investment.

Although a relatively new asset class in Australia, the managed agribusiness investment sector is well-recognised and established in the United States. In the US, well over $2 billion is invested in this sector each year by individuals through mutual and pension funds.

Importantly, the 100% tax deductible nature of agribusiness investments (supported by Australian Taxation Office rulings) opens numerous tax planning and wealth creation possibilities.
Agribusiness is simply the business of growing crops for human consumption and use. For example the sale of almond, olive, citrus, table grape, mango and timber crops are all directed primarily at the export markets, bringing in valuable overseas revenue to Australia.

How does it work?

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

In summary, this strategy allows the individual to reduce their taxation liabilities in the short term, at the same time as creating a diversified investment which is expected to provide an income in the longer term.
Through managed investment schemes (MIS) small investors are able to participate in world-class agriculture projects with the additional benefit of being up to 100% tax deductible. ATO product rulings have also provided certainty on the tax deductions offered.
An agri-investment prior to 30 June can provide a range of wealth creation and taxation investment strategies. By deferring a current tax liability, it allows reinvestment of tax savings into:

• Reducing non-deductible debt
• Acquiring a share portfolio
• Increasing superannuation contributions
• Acquiring an investment property
• Reducing periodic PAYG payments
• Creating future income for a specific purpose (eg: private education fees, deposit for a house, superannuation contributions, lump sum mortgage payment)
• Repayment of Director/Shareholder division 7A loans
• Providing an effective retirement income stream
• Sheltering capital gain or abnormal income.

Does this apply to me?

Tax planning may be applicable to you if:

• You expect to earn more than $63,000 this financial year
• You have sold an investment property or shares this year
• You have received an ETP payment or a bonus
• You want to accelerate the repayment of your home mortgage
• You have a credit card debt you would like to reduce
• You want to save money for a house deposit or your children’s private education
• You want a tax-effective investment

If you answer yes to one or more of these items, please contact, Adrian Raftery or Andrew Wawrzyniak to arrange an appointment to learn more about how tax planning may assist you in building future wealth.