cabinet review, page-9

Hi Molonski,

As we have seen in the newspapers, “It was agreed to allow 100 per cent tax deductibility for investments in blue gum and pine plantation enterprises that could prove 70 per cent of their management fees were actually spent on tree husbandry.”

As I showed in thread http://www.hotcopper.com.au/post_thread.asp?fid=1&tid=402538#1441011 ,
the following is the 2006 GTP Income Statement

($’000)
Total revenue and other income ---- 499,511 - (100%)
Commissions -----------------------(23,802) - (4.8%)
Marketing, selling and promoting ... (56,941) - (11.4%)
Agriculture and MIS related expenses (166,952)-(33.4%)
Administration ---------------------- (32,548) - (6.5%)
Finance costs ---------------------- (22,997) - (4.6%)
Fair value adjustment to ... ---------- (3,282) - (0.7%)
------------------------------------------------------
Profit before income tax ------------ 192,989 - (38.6%)

GTP (and TIM) has to choose between

(1) To keep this sort of profit margin (before tax) of 38.6% and give up growers’ tax deductibility of 100%;

(2) To keep growers’ tax deductibility of 100% and raise the “tree husbandry” to 70% (thus the margin has to be dramatically reduced from 38.6%).

I reckon neither way would make GTP (and TIM) very comfortable at all.