Okay, my take on this, based on newspaper articles, is that...

Okay, my take on this, based on newspaper articles, is that projects entered into prior to 1/7/07 are covered for the life of the project.

At present investors claim a deduction for the upfront fees to offset against their other income.

My understanding is that this change only affects the tax deductability of those up front fees, and possibly early annual expenses.

The horticultural products generally have an upfront fee for the establishment of the almond lot, olive grove, etc followed by annual fees for services rendered, ie tending to the trees, harvesting, marketing and selling the product, etc. Once the trees enter productive life, about 3 years after purchase, then they start generating revenue.

The way the articles are worded suggests to me that the upfront fees and annual charges for expenses cannot be used as a tax deduction unless it is to offset an individual's income from the trees. I am unsure if this enables them to carry forward the fees to future years thus prolonging when investors have to start paying tax on the income from the trees.

Horticultural (or agri-business) projects differ from plantation projects in that agri has an up front fee plus annual fees whereas plantation generally have one single upfront fee. Also, revenue differs in that plantations have a once only revenue source, when the trees are chopped down and sold as is or as wood chips whereas agri has an annual income based on the product of the trees once they enter productive life. That sounds to me, as I mentioned earlier, as more of an operating a business type investment than the plantations.

I think we need a hand from Alpha as he seems quite au fait with all this stuff.