A number of agribusiness investment schemes will fail to achieve capital raising targets this financial year following a crackdown by the Australian Taxation Office (ATO).
Most promoters of these schemes are admitting advisers have been frightened off by the recent ATO moves on the taxation components of the products.
Blaxland Vineyards director Ron Collins says it is very hard to sell agribusiness schemes to planners this year.
“The economy is slower and the tax office moves have hit agribusiness schemes,” he says.
Palandri Wines executive project director Rob Palandri estimates that $1 billion is normally put into agribusiness schemes, but this year he estimates this figure will fall to between $600-700 million.
“Advisers are going for projects that are delivering returns and for promoters that have been in the market for some while,” he says.
Collins agrees. “We have been around for seven years and, without the added bonus of being on the van Eyk list, it would have been a very tough time for us this year,” he says.
Northwood Financial Services managing director Rod North says that only having a couple of projects recommended on the van Eyk list has also had a negative impact on the other schemes.
“Despite there being a number of good schemes that have attracted quality research from people such as PIR and Lonsec, advisers are finding the whole sector too hard to deal with and are walking away,” he says.
“A lot of projects this year will fall over.”
Moneyplan Australia director Peter Dunn says there is still demand from clients for these schemes as a way of managing tax problems. But he admits the tax office and the Australian Securities and Investments Commission’s (ASIC) negative publicity about the schemes is making it harder to recommend them to clients.
Potential investors in the agribusiness industry are also concerned about the profit warnings put out in recent weeks by many of the timber companies.
Yates last week was the latest to warn about a significant shortfall in profits for this financial year, due to demand drying up.
Despite the gloom, Collins says his company is on target with its Barossa Valley winery and will be planting many hectares shortly.
Palandri says his company has raised $50 million this year, which is up on the $28 million raised in the previous year.
“We now have 6.7 per cent of the agribusiness investment market in Australia,” he says.
Peter Dunn is also a director of a woodlot project, Timber Australia, and he expects this to achieve the minimum subscription by June 30.
