Summary of issues raised and responses
I assume the investors tax position would alter to take into account the reapportionment. Please confirm. 2. Would this change in the apportionment of harvest proceeds be considered a change sufficient to remove the arrangement from the draft determination [TD 2009/D9]?
Compendium
The ATO published responses to 3 submissions on this ruling in TD 2010/7EC; TD 2010/8EC; TD 2010/9EC. Outcome labels are heuristic — read the ATO response for the detail.
1Oral comments relating to other Managed Investment Scheme (MIS) issues, primarily questioning whether further Determinations would be issued in relation to forestry MIS issues.noted
ATO response
Generally advised that further issues are being assessed and products will be issued if necessary. It should be noted that since the comments were received four Determinations, that is Taxation Determinations TD 20009/D13, 2009/D15, 2009/D15 and 2009/D16 concering forestry MIS issues have been issued.
2The commentating entity supports the draft Determinations; however has concerns about the example used in TD 2009/D9. It believes that the example should remove the reference to the Commissioner's review and addendum as it is unnecessary for the Determination to state what is clearly acceptable. It also suggested that multiple examples would be better.accepted
ATO response
The example in TD 2010/7 has been adjusted and an additional example has been added.
3The query deals with the situation where there is a reasonably substantial reapportionment of the amount to be paid to the new responsible entity (RE), for example, where the share of net proceeds to go to the RE for the scheme would increase significantly. The following two questions were asked: 1. I assume the investors tax position would alter to take into account the reapportionment. Please confirm. 2. Would this change in the apportionment of harvest proceeds be considered a change sufficient to remove the arrangement from the draft determination [TD 2009/D9]?accepted
ATO response
The ATO will need to consider the exact facts of any changes before assessing the tax implications. That will only be able to be assessed when a detailed application or proposal is formally put to it for consideration. The sort of issues that might arise from a change of RE, where the share of net proceeds to the RE increase, include: • Allowability of section 8-1 of the Income Tax Assessment Act 1997 deductions - is there still a sufficient commercial purpose to the activities such as to support a conclusion that a business continues to be carried on? • Commissioner's discretion in relation to the non-commercial loss provisions - is there still an objective expectation that, within a commercially viable period , the activity will meet one of the one of the objective tests set out in sections 35-30, 35-35, 35-40 or 35-45 or produce assessable income for an income year greater than the deductions attributable to it? A relevant example has been added to TD 2010/7.