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Fingers pointed at advisersArticle from:article: Herald-sun
July 16, 2009 12:00am
MOST of the 1100 financial advisers who sold questionable tax-break schemes in agribusiness investment company Great Southern were not recognised by the industry, a Senate inquiry has been told.

More than 45,000 investors had money in managed investment scheme (MIS) products with the company when it was placed in receivership in May.

The products aimed to provide immediate compensation for investments in timber plantations that would otherwise take a decade to mature.

Many people were encouraged by advisers to invest solely for the tax breaks rather than the long-term investment.

But only 155 of the advisers were registered accountants or financial planners with tertiary qualifications.

CPA Australia, which represents more than 95,000 finance, business and accountants, said only 75 of its registered members sold products for Great Southern.

CPA general manager Paul Drum said they did this despite being aware that making an investment based on the tax deductibility features was not a very good way to make money.

He said CPA had not taken sponsorship or marketing money from groups that use MIS schemes for many years.

"We don't want to be seen as passively approving these types of investments," he said.

But it was not the same story for the Institute of Chartered Accountants Australia (ICAA), which told the hearing that 80 of its members had sold products for the company. Head of financial planning Hugh Elvy said the institute had taken sponsorship money from Great Southern during the past year.

Its suggestion to limit the tax deductibility of managed investment schemes to the income received on individual schemes was criticised by CPA Australia.

Mr Elvy said the idea was raised as a result of the recent collapse of the two schemes.

Quarantining tax deductibility benefits to income generated from a particular investment rather than the investment in general would occur if the idea was adopted.

The Senate revelations came as the liquidator at Great Southern's smaller rival Timbercorp, Mark Korda, stood down 23 workers employed in its forestry business.

The workers were asked yesterday to take leave without pay until September 30 or to take redundancy with their full entitlements.

Mr Korda said last night that, by accepting leave without pay, employees had a better chance of retaining their jobs if a new owner could be found for the business.

But he expected most to accept an immediate redundancy.

The Victorian Supreme Court has heard that a winding up of olive and almond-growing projects run by Timbercorp was the best chance investors had of getting any return.

Mr Mark Korda is seeking orders from the court to wind up the olive and almond projects, claiming there are insufficient funds to continue to operate them under their existing structure.