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This Product Ruling sets out the Commissioner's opinion on the way in which the relevant provision(s) identified in the Ruling section (below) apply to the defined class of entities, who take part in the scheme to which this Ruling relates. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 (ITAA 1997) unless otherwise indicated. In this Product Ruling this scheme is referred to as the Goulburn Valley Orchards Project or simply as 'the Project'.

This part of the Product Ruling specifies which entities can rely on the tax benefits set out in the Ruling section of this Product Ruling and which entities cannot rely on those tax benefits. In this Product Ruling, those entities that can rely on the tax benefits set out in this Ruling are referred to as Grower.

The class of entities who can rely on those tax benefits consists of entities who were accepted to participate in the scheme specified below and who executed relevant Project Agreements mentioned in the Arrangement part of Product Ruling PR 1999/7 on or after 3 March 1999 and on or before 30 June 1999. They must have a purpose of staying in the scheme until it is completed (that is, being a party to the relevant agreements until their term expires), and deriving assessable income from this involvement.

The class of entities to whom this Ruling applies does not include entities who have terminated or who intend to terminate their involvement in the scheme prior to its completion, or who otherwise do not intend to derive assessable income from the Project. Growers who elect to market their own produce are also excluded from the class of entities to whom this Ruling applies.

The class of entities defined in this Product Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 12 to 26 of Product Ruling PR 1999/7.

If the scheme actually carried out is materially different from the scheme that is described in this Product Ruling, then: • this Product Ruling has no binding effect on the Commissioner because the scheme entered into is not the scheme on which the Commissioner has ruled; and • this Product Ruling may be withdrawn or modified.

This work is copyright. Apart from any use as permitted under the Copyright Act 1968 , no part may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to: Commonwealth Copyright Administration Attorney General's Department Robert Garran Offices National Circuit Barton ACT 2600 or posted at: http://www.ag.gov.au/cca

This Product Ruling applies for the income year ended 30 June 2006 for Growers who, on or after 3 March 1999 and on or before 30 June 1999, entered into the scheme that is set out in paragraphs 12 to 26 of Product Ruling PR 1999/7. This Product Ruling provides advice on the availability of tax benefits to the specified class of entities up to 30 June 2006. This Product Ruling will continue to apply to those entities even after its period of application for schemes entered into during the period of application.

However the Product Ruling only applies to the extent that: • there is no change in the scheme or in the entity's involvement in the scheme; • it is not later withdrawn by notice in the Gazette ; or • the relevant provisions are not amended.

If this Product Ruling is inconsistent with a later public or private ruling, the relevant class of entities may rely on either ruling which applies to them (item 1 of subsection 357-75(1) of Schedule 1 to the Taxation Administration Act 1953 (TAA)).

If this Product Ruling is inconsistent with an earlier private ruling, the private ruling is taken not to have been made if, when the Product Ruling is made, the following two conditions are met: • the income year or other period to which the rulings relate has not begun; and • the scheme to which the rulings relate has not begun to be carried out.

If the above two conditions do not apply, the relevant class of entities may rely on either ruling which applies to them (item 3 of subsection 357-75(1) of Schedule 1 to the TAA).

Although this Product Ruling deals with the laws enacted at the time it was issued, later amendments may impact on this Product Ruling. Any such changes will take precedence over the application of this Product Ruling and, to that extent, this Product Ruling will have no effect.

Entities who are considering participating in the scheme are advised to confirm with their taxation adviser that changes in the law have not affected this Product Ruling since it was issued.

Product Rulings were introduced for the purpose of providing certainty about tax consequences for entities in schemes such as this. In keeping with that intention the Tax Office suggests that promoters and advisers ensure that participants are fully informed of any legislative changes after the Product Ruling is issued.

Although now withdrawn, the tax benefits set out in Product Ruling PR 1999/7 continue to apply to participants who are within the specified class of entities to which the Ruling applied and who entered into the specified scheme on or after 3 March 1999 and on or before 30 June 1999. This is subject to there being no material difference in the scheme or in the entities' involvement in the scheme.

A Grower who is an individual accepted into the Project on or before 30 June 1999 may have losses arising from their participation in the Project that would be deferred to a later income year under section 35-10. Subject to the Project being carried out in the manner described in paragraphs 12 to 26 of Product Ruling PR 1999/7, the Commissioner will exercise the discretion in paragraph 35-55(1)(a) for these Growers for the income year ended 30 June 2006.

The conditional exercise of this discretion will allow losses arising from a Grower's participation in the Project in the income year ended 30 June 2006 to be offset against the Grower's other assessable income in that income year.

The scheme that is the subject of this Ruling is described in paragraphs 12 to 26 of Product Ruling PR 1999/7.

In deciding to exercise the discretion in paragraph 35-55(1)(a) on a conditional basis for the income year ended 30 June 2006 the Commissioner has applied the principles set out in Taxation Ruling TR 2001/14 Income tax: Division 35 - non-commercial business losses. Accordingly, based on the evidence supplied by the Responsible Entity of the Project, the Commissioner has determined that for the 2005-06 income year it is unreasonable to apply the rule in section 35-10 as the Project activity was affected by special circumstances outside the control of the Operations Manager.

The exercise of the Commissioner's discretion under paragraph 35-55(1)(a) is conditional on the Project being carried on in the manner described in this Ruling during the income years specified. If the Project is carried out in a materially different way to that described in the Ruling a Grower will need to apply for a private ruling on the application of section 35-55 to those changed circumstances.

The following is a detailed contents list for this Ruling: Paragraph What this Product Ruling is about 1 Class of entities 2 Qualifications 5 Date of effect 8 Changes in the Law 13 Note to promoters and advisers 15 Ruling 16 Continuing application of Product Ruling PR 1999/7 16 Division 35 - deferral of losses from non-commercial business activities 17 Section 35-55 - exercise of Commissioner's discretion 17 Scheme 19 Appendix 1 - Explanation 20 Division 35 - deferral of losses from non-commercial business activities 20 Appendix 2 - Detailed contents list 22