A DISTRAUGHT Timbercorp investor is facing a ballooning debt of more than $250,000 on 3.75ha of almonds and avocados.

Yet the investor, who did not wish to be named, does not own the land on which the trees grow or the water used on them.

Mr X only owns the rights to almond and avocado harvests.

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Like thousands of other MIS investors, he has borrowed 90 per cent of the money needed to invest in the avocado and almond lots from Timbercorp.

Mr X's initial 2006 investment of $125,450 has grown to $261,787 as Timbercorp sent him annual invoices for management fees and rent.

The return on the investment totals $23,000, while the loan repayments have skyrocketed as Mr X borrowed more money from Timbercorp to repay Timbercorp.

"I rang them (Timbercorp) and asked when it was going to end," Mr X said.

When contacted by The Weekly Times, Mr X said he felt foolish, but never realised how much he would end up paying in ongoing management fees to Timbercorp.

"This will be the year when you see the debt levels of idiots like me skyrocket," Mr X said.

"I think people like me are only now waking up to what we've got ourselves into.

"I hope Timbercorp is willing to help investors like me."

Mr X was able to claim the initial investment, management fees and rent against his income.

But he has still invested 55-60 cents in the dollar of his own money in the projects, while Australia's taxpayers covered the remaining 40-45 cents in the dollar. Mr X said he understood his accountant may have gained commission on the deal and consequent borrowings, but is yet to get a clear answer.

HOW IT HAPPENED

IN 2006 small business operator Mr X faced a hefty tax bill.

Mr X's accountant suggested he invest in 15 Timbercorp almond and avocado lots to offset the tax bill.

The accountant said Timbercorp would lend Mr X 90 per cent of the $125,450 needed to invest in the 15 lots.

So Mr X invested $60,000 in eight 0.25ha almond lots and $65,450 in seven 0.25ha avocado lots. Mr X put down a 10 per cent deposit ($12,545) on the lots and borrowed $112,905 (plus costs) from Timbercorp Finance.

Total borrowings = $112,905

Total cost = $125,450.

OCTOBER 2006

Mr X received a bill from Timbercorp for $41,900 to cover the second-year management fees and rent on his 3.75ha of almonds and avocados.

The invoice included a statement that Mr X could borrow more money to cover the bill.

The statement read: "Provided you are not in arrears on an existing loan, you may apply for a principal and interest loan from Timbercorp Finance Pty Ltd to borrow up to 90 per cent of the total invoice amount".

It went on to state loan documents have been sent to Mr X in a separate envelope.

So Mr X handed over another 10 per cent deposit and signed the loan documents to borrow another $37,710.

Total Borrowings = $150,615

Total cost (excluding interest) = $167,350.

OCTOBER 2007

Mr X was hit with another bill from Timbercorp for $41,900 to cover third-year management fees and rent. So he borrowed another $37,710.

Total Borrowings = $188,325

Total Cost (excluding interest) = $209,250.

OCTOBER 2008

Mr X was stunned to receive another invoice from Timbercorp for $52,537 covering licence fees and operating costs. He also discovered the rent on each of his almond lots has jumped from $454.55 to $700.

Once again Timbercorp had sent out loan documents for him to sign. Mr X faced finding another 10 per cent deposit of $5253 and borrowing another $47,283.

Total Borrowings = $235,608

Total Cost (excluding interest) = $261,787

The number of lots held by Mr X have been changed to protect his identity.