| Issue |
What to consider
|
| Business Model |
Understand the underlying business model of the project such as the annual fees, and the cost of the investment |
Scheme Structure
|
Under the lease and management agreements between the MIS promoter and the grower, the constitution and compliance plan, finance agreements and head lease arrangements between the land holding entity and the management company. |
| Distribution or Product Sale Agreements |
Is there an existing market or existing agreement for the sale of the product? |
| Fund Manager |
What is their track record? |
| Risks |
Consider unique agriculture risks in addition to investment risks such as drought, storms, floods, disease etc
|
| ATO Ruling |
Does the project have an ATO Product Ruling confirming tax deductibility? All MIS should have a product ruling. |
Ownership of Key Assets
|
Who owns the equipment for the project? Who owns the product?
|
| Cash Cycle |
How will your funds be used? Whose money is it? How will the project service debt? What are the assessable income, taxation and cash flow outcomes at the maturity of the project?
|
| Sales Projections |
Review budgeted and actual sale comparisons
|
| Independent Research |
Independent research reports enable investors to compare the relative merits of the various agribusiness projects. Research companies such as Australian Agribusiness Group (AAG) and Adviser Edge are a few of the independent sources that provide research on agribusiness investment.
|
| Commissions |
Understand commissions common in MIS projects and commission rebates. In Australia financial planners and accountants distribute most agribusiness investments and receive significant fees and commissions. These products have commissions and marketing fees ranging from 5% -10%. Transacting via a broker like 2020 DIRECTINVEST will save you up to 8% in the cost of the investment by giving you an 80% cash rebate on commissions.
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