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TFS Sandalwood Project 2008

TFS Sandalwood Project 2008
Cash Rebate 8.25%
Closing Date CLOSED
Minimum Investment $11,500 (ex GST)
Term of Project 15 years
Research AAG 4 stars
Adviser Edge 4 stars
Lonsec Recommended
ATO Product Ruling 2008/4

Investing with TFS

Experienced Managers
The TFS Sandalwood Project 2008 (TFS 2008) is the company’s twelfth Sandalwood Project under management.

Expert Foresters to TFS, Peter Kimber and Chris Done, previously worked with the WA Department of Conservation and Land Management (CALM) on the original Sandalwood trial plantations in the area, and are widely renowned as Australia’s foremost Sandalwood experts.

An experienced plantation management team is located in Kununurra to ensure your plantation is established and maintained to the highest order.

The TFS parent company, TFS Corporation Ltd, listed on ASX Limited in December 2004.

Dedicated to Sandalwood
TFS first planted Indian Sandalwood in Kununurra in 1999 and has since planted over 1,200 hectares of commercial Sandalwood plantations on behalf of almost 700 individual growers and companies associated with TFS.

TFS is a specialist Indian Sandalwood plantation manager and is committed to the long term development of an Australian grown Indian Sandalwood industry.

The majority of their Directors are Growers and shareholders in TFS, confirming a dedication by the company to achieve the best possible Sandalwood growth, yields and returns for its Growers – in fact the company and Directors combined own approximately 20% of the sandalwood trees under management.

Sustainable Development
TFS believes that it can be part of a better world, starting with the Kimberley region.

About half of the Kimberley population is of Aboriginal descent. TFS works together with the region’s indigenous community to maximise the social benefits and promote this unique culture.

TFS is committed to sustainable development as a way of ensuring shared long-term benefits for the community, environment and TFS.

Environmentally Responsible

TFS adopts a proactive approach to environmental management.

Locally, the TFS Sandalwood plantations are assisting to lower the water-table and reduce salinity problems across the Ord River Irrigation Area (ORIA).

TFS is committed to plant only on previously cleared farming land. The bio-diverse nature of Sandalwood plantations makes them an ideal nesting place for native birds.

In 2006 TFS opened the first ever water recycling project in the ORIA. TFS was recognised as a regional leader in environmental management, winning the inaugural 2006 Remote and Rural Water Award from the Western Australian State Government. The water recycling project has important environmental and economic advantages and it takes environmentally friendly agriculture and forestry to the next level.

TFS has obtained accreditation in AS/NZS ISO 14001:2004 (Environmental Management Systems), AS/NZS ISO 9001:2000 (Quality Management Systems) and AS/NZS 4801:2001 (Occupational Health & Safety Management Systems).

Globally, TFS is ensuring the longevity of this much sought after species.

Investing in Sandalwood

Forestry Performs
The forestry industry has outperformed the S&P (Standard and Poor's) index for over 30 years.

An investment in Indian Sandalwood forestry with TFS offers a stable and tax effective investment in an alternative asset class with the potential for excellent returns.

An investment in Indian Sandalwood forestry with TFS offers a stable and tax effective investment in an alternative asset class with the potential for excellent returns.

High Demand for Indian Sandalwood
Sandalwood has been an integral part of Asian culture and religion for millennia, and remains a key ingredient in leading fragrances and cosmetics.

The Indian species of Sandalwood (Santalum Album) commands the highest price at auction due to its superior oil yields and long-term market acceptance. The current price for Indian Sandalwood logs averages over A$107,000 per tonne (December 2007 Indian auction).

Depleted Supplies
Due to such high demand for the wood and oil of the Indian Sandalwood tree, and an unbridled black market, supplies are rapidly diminishing.

Experts predict that current production levels in India of the Indian Sandalwood tree cannot be sustained if illegal harvesting cannot be restricted.

Australia has the only known commercial plantations of the species in the world, with TFS being the largest.

Soaring Prices
An increase in the price of Indian Sandalwood of 21% per annum (compounded) has been sustained for the last 16 years. Experts predict a continuing increase in price of at least 5% per annum due to the ever-increasing supply/demand imbalance of Indian Sandalwood.

Optimal Growing Conditions
The Ord River Irrigation Area (ORIA) of tropical Western Australia displays ideal conditions for the healthy growth of Indian Sandalwood.

The intellectual property built up by TFS over 8 years of plantation experience in the ORIA is second to none.

Supporting this is over 15 years of government research into Indian Sandalwood silviculture in the ORIA.

TFS 2008 Project Features

100% tax effective product rulings
TFS 2008 has been granted a Product Ruling (PR 2008/4) from the Australian Taxation Office (ATO). The ruling confirms that all fees paid in relation to TFS 2008 are fully tax deductible in the financial year they are paid1.

Growers that are registered for GST may also claim input tax credits for GST paid in relation to TFS 2008. By becoming a Grower, you are deemed to be in business and therefore entitled to register for GST.

Discount for Additional Lots
TFS 2008 has a minimum investment of one sixth of a hectare (1/6th Ha) for the entry price of $11,500 plus GST, with volume discounts available.

Twelve Months Interest Free
Establishment Fees may be paid over a period of 12 months, exclusive of interest. A deposit of 20% of Establishment Fees will be required upon application.

Attractive, Long-Term Finance
TFS has a range of finance options available and details can be obtained by contacting TFS.

Ability to Defer Ongoing Fees
Following the initial Establishment Fee, a Grower may elect to defer Lease and Management Fees via an annual election.

A percentage of Gross Proceeds of Sale (GPS) will be deducted for each year a Grower elects to defer. This deferral percentage will decrease over the term of TFS 2008 (see below).

Costs and Options

Fees per Sandalwood Lot of 1/6th Hectare

Option 1 – Annual Investment Option

Establishment Fee TFS Fee (AUD)
GST (AUD) Total (AUD)
1 to 5 lots 11,500 1,150 12,650
6 or more lots 11,000 1,100 12,100
Annual Management Fee2 1,000 100 1,100
Annual Lease Fee2 200 20 220

Annual deferral of Lease and Management Fees is available on the following basis:
  Percentage of Gross Proceeds of Sale
Years 1 – 6 4%
Years 7 – 10 3%
Years 11 – 12 2%

Option 2 – Joint Venture Option

At the same pricing structure, growers may enter into a Joint Venture arrangement with a second party, such as a spouse, Superannuation Fund or similar whereby the first partner pays the Establishment fees and the JV partner pays the ongoing Lease & Management fees. At harvest the Net Proceeds of sale will be divided equally between the Joint Venture partners. A minimum of 2 woodlots is required to be taken under this option.

1 Growers should be aware that Product Ruling 2008/4 is based on the precise arrangements identified in the Rulings. If the arrangement described in the Ruling is materially different for the arrangements actually carried out, the Ruling has no binding effect on the Commissioner and will be withdrawn or modified. Growers are recommended to read the Product Ruling in its entirety and seek their own professional taxation advice concerning the taxation implications to term of investment in TFS 2008.
2 Annual Fees increase at a fixed rate of 2% per annum in the year following the Establishment Period.
3 Harvesting should commence in Year 13 and be completed by Year 14. No Lease or Management Fees will be payable for years 13 and 14.
The financial assumptions and risks of TFS Sandalwood Project 2008 (TFS 2008) are shown in the Product Disclosure Statement (PDS). Only the PDS contains the offers to subscribe for securities in TFS 2008 and you should consider the PDS in deciding whether to acquire an investment in TFS 2008. You will need to complete the Application Form in or accompanying the PDS. The Responsible Entity for TFS 2008 and the entity making the offers is TFS Properties Ltd. Tropical Forestry Services Ltd and TFS Properties Ltd are both wholly-owned subsidiaries of TFS Corporation Ltd. A reference to TFS in this brochure is a reference to all or one of these entities, depending on the context.

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