Overview of MIS sector by Australian Taxation Office. Please refer to the ATO website for complete details. These are extracts only.
Recently there have been a number of events that have caused a great deal of uncertainty for investors in managed investment schemes in the agribusiness sector. These include:
· the scheme manager going into administration
· the scheme being wound up early
· appointment of new scheme managers
· scheme assets being sold
Your investment may have been managed by Great Southern Limited, Timbercorp Limited, Environinvest Limited, Palandri Wines Pty Ltd, Australian Bight Abalone Pty Ltd, Forestry Enterprises Australia (FEA) or Rewards Group Limited. The collapse of, or financial difficulties being experienced by these companies may have changed the tax consequences for your investment. We suggest you review your records as the companies listed above managed a variety of agricultural and forestry businesses, and their names might not be immediately familiar. The investments included grape, berry, avocado, mango, citrus, olive, almond, beef, abalone and forestry projects.
To help you understand your new obligations, we have prepared information about the action you need to take and answers to questions you may have.
If you use a tax agent, talk to them about the effect on your tax obligations. You’ll need to give them all the details about your investment to help them complete your tax return.
Are you a participant in a managed investment scheme where the manager has been placed into administration? How changes to your scheme affect you
This information explains how changes to your agribusiness Managed Investment Scheme (agribusiness MIS) may affect your income tax deductions. This information is relevant to you if:
- you hold an interest in an agribusiness MIS, for instance forestry, horticulture or aquaculture
- you have a product ruling from us about the agribusiness MIS arrangement your agribusiness MIS has undergone changes as a result of financial difficulties being experienced by the agribusiness MIS manager (or Responsible Entity) and
- you continue to hold the interest and the agribusiness MIS has not been terminated
We are working closely with the responsible entities, administrators and liquidators to understand the changes for specific projects, and to determine the tax outcomes for participants in the various MIS. We will communicate these specific tax outcomes to investors in the form of withdrawal notices, addendums or fresh product rulings. This is general information only. Your product ruling will be amended or withdrawn and replaced by another ruling where changes to the agribusiness MIS are significant enough to affect your tax outcomes. You should check the addendum, withdrawal notice or new product ruling for specific guidance relevant to your investment in the agribusiness MIS.
What happens to deductions you have claimed in earlier years?
If the agribusiness MIS was not implemented in the same way as described in the product ruling, you may not be entitled to deductions that you have already claimed.
What happens to the product ruling if my interest is terminated early?
We will withdraw the product ruling. The notice of withdrawal will contain an explanation about how the withdrawal affects your past and future deductions, and whether there are any special conditions about how you treat your past and future deductions. Unless there are special conditions, you will be able to rely on the product ruling up to the date specified in the notice of withdrawal for deductions you have already incurred and claimed as long as those deductions are as described in the product ruling and the MIS has been implemented in the same way as described in the product ruling. It is very important that you check the notice of withdrawal to determine if any conditions exist for your agribusiness (non-forestry) MIS.
How early termination of your agribusiness (forestry) MIS may affect deductions.
Division 394 contains specific rules that govern your entitlement to retain these deductions in some circumstances:
If you are an initial investor you must generally hold your interest in the MIS for at least 4 years, and the forestry manager must establish a plantation within 18 months of the agribusiness (forestry) MIS first receiving payments. If you cease holding your interest within 4 years but all other requirements for the forestry deductions have been met, you are still entitled to your deductions provided that the cessation was due to factors that are beyond your control. Note: if your agribusiness (forestry) MIS does not satisfy the 18 month establishment rule, then you will not be entitled to retain your deductions under Division 394. However, you may still be entitled to make a claim for deductions under general provisions if your activities constitute the carrying on of a business