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Wine grape growers welcome changes to MIS
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Wine Grape Growers Australia (WGGA), is supporting the Commonwealth Government’s decision to reduce the up-front tax deductions available to investors in non-forestry Managed Investment Schemes (MIS) in the agriculture sector from July 1, 2007.
WGGA Executive Director, Mark McKenzie, said there had been serious concerns expressed by growers over the influence of MIS vineyards in wine grape oversupply across Australia.
“MIS vineyard plantings have grown to 9.8% of the national vineyard estate or some 15,000 hectares in less than 10 years. Many growers feel that investor based plantings have played a significant part in overheating supply, and have secured long term supply contracts with wineries that have displaced many family run vineyards – removing viable markets for their grapes.”
“WGGA has welcomed the Government’s announcement, because it will reduce speculative, tax-driven plantings, and will reduce the activities of investment ‘cowboys’, but it will not stop new investment in vineyards. We are not anti-investment, or anti-MIS, but WGGA believes the huge up-front deductions for MIS investors has meant that some schemes have been sold at exorbitant per hectare cost levels, with establishment and management costs at many times the average cost of establishing and running similar vineyards. Whenever the tax deduction becomes the most attractive part of the investment there is the real danger that the plantings will be made, whether or not there is a viable future market for the grapes it produces – skewing the supply- demand balance for wine grapes and wine.”
Mr McKenzie said it was a good thing that investors will now have to decide to invest based on the capacity of the enterprise to return an operating profit over the longer term, not simply on short-term tax benefits.
“It is important that the Government also hears the views of existing growers in the industries effected by MIS, and we reject the impression given by some champions of non-forestry MIS that the changes to the tax deduction regime will spell the end of new investment in the non-forestry agriculture. That is not true!”