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ITC Sandalwood Project 2008

ITC Sandalwood Project 2008
Cash Rebate 8.25%
Closing Date CLOSED
Minimum Investment $4,500 (ex GST)
Term of Project 20 years
Research AAG 3 stars
Adviser Edge 4 stars
ATO Product Ruling 2008/27


What is sandalwood used for?
Indian Sandalwood is the most sought after of all the sandalwood species because of its high oil content. The oil is used as a base for high value perfumes and in medicine. The sandalwood sawdust/powder is used in joss sticks and sandalwood's furniture and carving properties are highly prized. Sandalwood has high religious significance in Hindu culture.

Why does sandalwood require host trees?
While sandalwood can grow alone, survival and vigour are poor. When planted with hosts specific to the particular stages of the sandalwood tree's life, survival and vigour are maximised.

Over the life of the project, a number of different host trees are used.

Do host trees have any value?
The host trees are being managed primarily as a source of nutrients for the sandalwood tree. The host species are not expected to have any commercial value in their own right. If however, there is some economic value in the host trees, it will be passed directly onto the growers.

Sandalwood grows wild through large parts of western, northern and eastern Australia. Is this the same species that ITC is growing?
No. The Australian native sandalwood takes in excess of 50 years to mature and has low oil content of approximately 2% compared with the Indian Sandalwood that ITC is growing which has an oil content of 6% after 15 years.

Are termites a risk?
No. Sandalwood oil deters termites, as does the location of the plantations on the black cracking clay present at the site.

Is there a supply contract in place for the Sandalwood plantations?
No. ITC believes that market forces will assist in selling this high value resource in a global climate that has limited supply of Indian Sandalwood available for sale.

Why is sandalwood so expensive?
Sandalwood is now a rare timber. Short supply has been created through the non-sustainable logging of naturally occurring timber through its native areas - Asia and Oceania. Demand for sandalwood continues to rise.

Will the rising water table in Kununurra affect the plantation?
Although the water table has been rising over time, the project is well positioned and the likelihood of rising groundwater causing damage is very remote. The project is located in a sub-tropical region where heavy rains are experienced however, to control any potential damage caused by flooding, an extensive drainage system is in place.
Offer closes 30 June 2008 unless withdrawn earlier.
Overview of investment The PDS offers you the opportunity to invest in a forestry managed investment scheme to grow two (2) species of sandalwood:

Australian Sandalwood – native Australian Sandalwood grown using dryland (non-irrigated) techniques. It is expected that the plantations will produce commercial yields of sandalwood from progressive harvesting between 10 to 18 years from planting.

Indian Sandalwood – the highest quality sandalwood grown on irrigated sites to be harvested approximately 15 years after planting. It is expected that the Indian sandalwood plantations will be harvested in one event.
Unit of investment You will be investing in a Plantation Unit (Unit), or Units. A Plantation Unit consists of separately identifiable areas of land within an Australian Sandalwood plantation and an Indian sandalwood plantation.

Each Plantation Unit will be 0.5 hectares in area and will consist of one (1) Woodlot of Australian Sandalwood with an area of 0.45 hectares and one (1) Woodlot of Indian Sandalwood with an area of 0.05 hectares.
Application fee You can invest in the project by paying the Establishment Services fee of $4,950 (inclusive of $450 GST) per Plantation Unit.
Other fees and costs There are no ongoing annual fees during the term of the project apart from insurance. A Land fee and a Management services fee are payable from your share of harvest proceeds.

Insurance is payable annually by all investors.
Terms Payment Subject to the approval of ITCPM and payment of the Terms Payment Deposit, you can elect to pay the Establishment Services fee by Terms Payment in 11 equal monthly instalments.
Taxation The AYO has issued Product Ruling 2008/27 in relation to the Project. The Product Ruling confirms tax deductibility for Establishment Services fees and certain other costs which may be incurred by you as referred to in the Product Ruling.
Minimum investment The minimum investment in the Project is one (1) Unit. Further investment can be made in increments of one (1) Unit.
Minimum subscription There is no minimum level of subscription that must be raised for the Project to proceed. The Responsible Entity is able to operate the Project regardless of the number of Units issued.
Tree species The project will comprise two closely related species of sandalwood:

Australian Sandalwood (Santalum spicatum) is native to Western Australia and South Australia. During the early years of settlement in Western Australia sandalwood was an important export. Sandalwood is still harvested from native forests today but supply is limited. In recent years there has been a significant area of Australian Sandalwood established in plantations in the south west of Western Australia.

Indian Sandalwood (Santalum album) is native to India and Indonesia. It is generally regarded as the highest quality sandalwood because of its high oil content and the quality of its oils. Supply is limited from native sources. Since 1999 there has been a significant area of Indian Sandalwood established at Kununurra in Western Australia. ITC is one of the major plantation managers of Indian Sandalwood.

Having different species in the investment diversifies the risk of relying on a single species in a single forestry region.

ATO Product Ruling

The ATO has issued a Product Ruling (PR 2008/27) for the Project.

Investors should be aware that: 
the Product Ruling only applies to a Grower who is a person within the class of entities to whom the Ruling applies;
the Product Ruling denies deductibility of costs where the Grower disposes of the Project interest within four (4) years of entering the Project or certain other events occur within that period;
the Product Ruling is a ruling on the application of taxation law as enacted at the date of issue;
the ATO does not expressly or impliedly guarantee or endorse the commercial viability of the Project, or the soundness or otherwise of the Project as an investment, or the reasonableness or commerciality of fees charged in connection with the Project; and
the Product Ruling will only be binding on the Commissioner of Taxation if the Project is implemented in the manner provided in the Product Ruling.

Simply download an Investment Brochure/PDS above. It’s that easy!
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