SMSFs to be Their Own ‘Bank’ to Fund Investment

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SMSFs Receive Rent for Leasing the Orchard Assets to Growers!

 While this is the eighth year that Almond Investors Limited has made an Almond Project available to the retail market, it is the first year that its Project has been specifically designed to suit SMSFs.

 “We chose to create our 2011 Project predominantly for SMSFs because they would generally have the ability to fund ongoing obligations, avoiding the need for individuals to use their own monies or organise debt finance,” said Wayne Overall, Executive Director, Almond Investors Limited.

 The structure is simple:

  1. The tax-paying individual makes the Grower payment due on application and receives the corresponding tax deduction at their marginal tax rate.
  2. The SMSF then becomes a Grower and makes the required payments over the next 5 years, receiving the relevant tax deductions
  3. From Years 6-17, the SMSF receives 61% of all the harvest sale proceeds (with the individual receiving the balance)
  4. From Years 18-30, the SMSF receives 100% of the harvest proceeds
  5. The SMSF holds units in an Asset Trust which owns all the orchard assets
     

“We suggest that SMSF trustees use a small part of their Fund’s asset base for this investment.  By funding the acquisition of the orchard assets through the SMSF it removes any need for bank finance. 

 In fact, our 2011 Project has no bank funding of any kind – it is debt free.

 As a company, Almond Investors Limited has low levels of debt,” said Mr Overall.

“Investors could invest in our 2011 AIL Almond Orchard Project as part of a retirement planning strategy so that their investment is cash positive when they retire, thus giving themselves the opportunity to earn annuity income during their retirement years.

 “Almond trees have a productive lifespan of 30 to 35 years so this is a long-term investment, but given the longevity of Australians entering retirement; it is not an exceptionally long timeframe,” said Mr Overall.

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