The listed companies running and promoting rural managed investment schemes, such as Timbercorp and Great Southern Plantations, have taken a sharp hit as the government moves to change MIS tax treatments. I have no sympathy for them.
Rural MIS have long been a source of concern to me as most of them seem to be more about misplaced enthusiasm for minimising tax and paying very large sales commissions than actually earning good returns.
At last the federal government is doing something about it - but it's a confusing and most inconsistent path that it has taken, somehow deciding that a scheme that plants a tree for its wood is totally different from a scheme that plants a tree for its nuts or fruit.
According to the federal government, someone who invests in a scheme that involves trees and wood is "carrying on a business", but investing in a scheme with trees and fruit is, well, something else.
There's an obvious line here about the politicians being unable to see the wood for the trees, or the trees for the wood, or maybe the tax deduction for the political donation - take your pick depending upon how cynical you might be about politics.
As far as I can see, most rural MIS seem more about tax than wood, nuts or fruit. There is something rather sad in the Australian character that a great many people would prefer to burn a dollar than give half of it to the tax man.
Most of the $1.3 billion or so ploughed into rural MIS last financial year went on very high marketing costs, sales commissions and not very good investments that are highly illiquid, quite risky and don't yield much for all their effort. But they were fully tax deductible up front, which is why the punters keep coming.
I have seen MIS prospectuses where the fine print disclosed barely half the funds invested actually went into some form of farming. There was plenty of outrage about the 10 per cent sales commission the Westpoint mob were paying - but 10 per cent is the MIS standard with plenty of schemes paying more, often through the back door as "reimbursed marketing costs".
There are some reasonable MIS that do stack up as investments, but they are in a distinct minority.
What did do well, until the government started questioning the taxation treatment, were the promoters. Life will become a little more difficult for them now but far from impossible.
Canberra looked after its mates in the timber plantation industry by still allowing the full tax deduction on MIS investments as long as 70 per cent of the invested money actually goes into planting and growing trees - hardly a draconian.
Many of the MIS promoters had been diversifying out of timber into other crops and it's that diversification that will now be tougher. Companies will actually need to build up a track record and show genuine returns.
Like I said, at the outset, I have no sympathy for them.