Income tax: Goulburn Valley Orchards Project

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.

The class of entities who can rely on those tax benefits are referred to as Growers. Growers will be those entities who were specifically identified in the Ruling part of Product Ruling PR 1999/7 and who, on or after 3 March 1999 and on or before 30 June 1999, entered into the specified scheme that is set out in paragraphs 12 to 26 of that Ruling.

The class of entities who can rely on the tax benefits set out in the Ruling section of this Product Ruling does not include entities who: • terminated their involvement in the scheme prior to 1 July 2007, or who otherwise did not intend to derive assessable income from it; • are accepted into this Project before 3 March 1999 or after 30 June 1999; or • participate in the scheme through offers made other than through the Product Disclosure Statement.

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 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because the scheme entered into is not the scheme on which the Commissioner has ruled; and • this Product Ruling may be withdrawn or modified.

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This Product Ruling applies only to the specified class of entities that enter into the scheme set out in paragraphs 12 to 26 of PR 1999/7 between 3 March 1999 and 30 June 1999.

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to the extent that: • there is no change in the scheme or in the entity's involvement in the scheme; • it is not later withdrawn by notice in the Gazette ; or • the relevant provisions are not amended.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 now withdrawn, the tax benefits set out in PR 1999/7 continue to apply to Growers who are within the specified class of entities to which the Product Ruling applied and who entered into the specified scheme between 3 March 1999 and 30 June 1999. This is subject to there being no material difference in the scheme or in the entities involved in the scheme.

A Grower who is an individual accepted into the Project between 3 March 1999 and 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 PR 1999/7, the Commissioner will exercise the discretion in paragraph 35-55(1)(a) for Growers for the income year ended 30 June 2008. This conditional exercise of the discretion will allow those losses to be offset against the Grower's other assessable income in the income year ended 30 June 2008.

The scheme that is the subject of this Ruling is specified in paragraphs 12 to 26 of PR 1999/7. It also incorporates the following additional documents: • Correspondence dated 10 January 2009; • Correspondence to Growers dated 23 September, 30 August and 13 October 2008; • Report to Growers dated August 2008; • Independent Experts Report entitled 'Review of Goulburn Valley Orchards' dated July 2008; and • Produce reports and revised projected yields for 2007-08 and 2008-09.

A meeting of Growers on 9 October 2008 voted in favour of a resolution to terminate the scheme with immediate effect. As a result of the resolution being passed, Growers have no further financial obligations in relation to the scheme for periods after 30 June 2008.

In deciding to exercise the discretion in paragraph 35-55(1)(a) on a conditional basis for the 2007-2008 income year, the Commissioner has applied the principles set out in Taxation Ruling TR 2007/6 Income tax: non-commercial business losses: Commissioner's discretion. Based on the evidence supplied by the Responsible Entity, the Commissioner has determined that for the 2007-2008 income year it is unreasonable to apply the rule in section 35-10 as the Grower's activity was affected by special circumstances outside the control of the 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 Ruling is about 1 Class of entities 2 Qualifications 5 Date of effect 8 Ruling 13 Continuing application of PR 1999/7 13 Division 35 - deferral of losses from non-commercial business activities 14 Section 35-55 - exercise of Commissioner's discretion 14 Scheme 15 Termination of the Scheme 16 Appendix 1 - Explanation 17 Deferral of losses from non-commercial business activities and the Commissioner's discretion 17 Sections 35-10 and 35-55 17 Appendix 2 - Detailed contents list 19