Tax Time – Trees and other tax-effective Investments

Trees and other tax-effective investments have been ways to gain a tax deduction for years, but it has it’s risks. Hear me out:

In the past there were several operators of Managed investment Schemes in Australia that allowed an investment that was effectively to buy an allotment of trees, almonds, grapes or some other crop.  This initial investment was an “expense” that was fully tax deductible today and all revenue in years to come once that crop had grown and was ready to harvest was “income”.

The idea was tax deferral in concept, but in reality, when that “expense” was an amount you could borrow and claim today and then pay back over the coming years they became more complex and with large commissions paid to financial advisers and accountants thrown in increasing the grower’s exposure, most of them collapsed.

There is no point in burning a dollar today to save 40c in tax.  If it sounds too complex and unrealistic to be true, if you can’t get straight answers on how something works, think twice.  Perhaps my next post would make more sense to you..

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