Product Ruling PR 2007/81
Date of effect: 30 June 2006

What this ruling is about: 1. This 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 2001 Timbercorp Almond Project or simply as 'the Project'. Class of entities 2. 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. 3. The class of entities who can rely on this Ruling consists of the entities who are described in Product Ruling PR 2001/15 and who, between 2 March 2001 and 30 June 2001, entered into the scheme that is set out in paragraphs 15 to 36 of that Ruling. They will 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. In this Ruling these entities are referred to as 'Growers'. 4. 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. Superannuation Industry (Supervision) Act 1993 5. This Product Ruling does not address the provisions of the Superannuation Industry (Supervision) Act 1993 (SISA 1993). The Tax Office gives no assurance that the product is an appropriate investment for a superannuation fund. The trustees of superannuation funds are advised that no consideration has been given in this Product Ruling as to whether investment in this product may contravene the provisions of SISA 1993. Qualifications 6. The class of entities defined in this Product Ruling may rely on it provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 15 to 36 of PR 2001/15. 7. If the scheme actually carried out is materially different from the scheme that is described in this Product Ruling, then: 8. 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:

Class of entities or scheme: 2. 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. 3. The class of entities who can rely on this Ruling consists of the entities who are described in Product Ruling PR 2001/15 and who, between 2 March 2001 and 30 June 2001, entered into the scheme that is set out in paragraphs 15 to 36 of that Ruling. They will 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. In this Ruling these entities are referred to as 'Growers'. 4. 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. | Superannuation Industry (Supervision) Act 1993: 5. This Product Ruling does not address the provisions of the Superannuation Industry (Supervision) Act 1993 (SISA 1993). The Tax Office gives no assurance that the product is an appropriate investment for a superannuation fund. The trustees of superannuation funds are advised that no consideration has been given in this Product Ruling as to whether investment in this product may contravene the provisions of SISA 1993. | Qualifications: 6. The class of entities defined in this Product Ruling may rely on it provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 15 to 36 of PR 2001/15. 7. If the scheme actually carried out is materially different from the scheme that is described in this Product Ruling, then: 8. 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: 9. This Ruling applies for the income years ending 30 June 2006 and 30 June 2007 for Growers who, between 2 March 2001 and 30 June 2001, entered into the scheme that is set out in paragraphs 15 to 36 of PR 2001/15. This Product Ruling provides advice on the availability of tax benefits to the specified class of entities up to 30 June 2007. 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. 10. However, the Product Ruling only applies to the extent that: 11. 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)). 12. 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: 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). | Changes in the law: 13. 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 the Ruling and, to that extent, this Product Ruling will have no effect. 14. 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. | Note to promoters and advisers: 15. 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. | Continuing application of Product Ruling PR 2001/15: 16. Although now withdrawn, the tax benefits set out in PR 2001/15 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 between 2 March 2001 and 30 June 2001. This is subject to there being no material difference in the scheme or in the entities' involvement in the scheme. | Section 35-55 - exercise of Commissioner's discretion: 17. A Grower who is an individual accepted into the Project between 2 March 2001 and 30 June 2001 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 15 to 36 of PR 2001/15, the Commissioner will exercise the discretion in paragraph 35-55(1)(b) for the income years ending 30 June 2006 and 30 June 2007. 18. This conditional exercise of the discretion allows those losses to be offset against the Grower's other assessable income in the income year in which the losses arise. 19. The scheme that is the subject of this Ruling is described in paragraphs 15 to 36 of PR 2001/15 (now withdrawn). A copy of PR 2001/15 can be obtained on the Tax Office's Internet site at http://www.ato.gov.au. Commissioner of Taxation 12 September 2007 | Division 35 - deferral of losses from non-commercial business activities: 20. Division 35 applies to losses from certain business activities from the income year ended 30 June 2001 and subsequent years. Under the rule in subsection 35-10(2) a deduction for a loss incurred by an individual (including an individual in a general law partnership) from certain business activities will not be taken into account in an income year unless: | Exercise of Commissioner's discretion: 21. In deciding to exercise the discretion in paragraph 35-55(1)(b) on a conditional basis for the income years ended 30 June 2006 and 30 June 2007 , the Commissioner has applied the principles set out in Taxation Ruling TR 2007/6 Income tax: non-commercial business losses: Commissioner's discretion. Accordingly, based on the evidence supplied, the Commissioner has determined that for those income years: 22. A Grower who would otherwise be required to defer a loss arising from their participation in the Project under subsection 35-10(2) until a later income year is able to offset that loss against their other assessable income in the year it is incurred. 23. The exercise of the Commissioner's discretion under paragraph 35-55(1)(b) 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 on in a materially different way from 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. 24. The following is a detailed contents list for this Ruling: Not previously issued as a draft

Ruling: 16. Although now withdrawn, the tax benefits set out in PR 2001/15 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 between 2 March 2001 and 30 June 2001. This is subject to there being no material difference in the scheme or in the entities' involvement in the scheme. | Section 35-55 - exercise of Commissioner's discretion: 17. A Grower who is an individual accepted into the Project between 2 March 2001 and 30 June 2001 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 15 to 36 of PR 2001/15, the Commissioner will exercise the discretion in paragraph 35-55(1)(b) for the income years ending 30 June 2006 and 30 June 2007. 18. This conditional exercise of the discretion allows those losses to be offset against the Grower's other assessable income in the income year in which the losses arise. 19. The scheme that is the subject of this Ruling is described in paragraphs 15 to 36 of PR 2001/15 (now withdrawn). A copy of PR 2001/15 can be obtained on the Tax Office's Internet site at http://www.ato.gov.au. Commissioner of Taxation 12 September 2007 | Division 35 - deferral of losses from non-commercial business activities: 20. Division 35 applies to losses from certain business activities from the income year ended 30 June 2001 and subsequent years. Under the rule in subsection 35-10(2) a deduction for a loss incurred by an individual (including an individual in a general law partnership) from certain business activities will not be taken into account in an income year unless: | Exercise of Commissioner's discretion: 21. In deciding to exercise the discretion in paragraph 35-55(1)(b) on a conditional basis for the income years ended 30 June 2006 and 30 June 2007 , the Commissioner has applied the principles set out in Taxation Ruling TR 2007/6 Income tax: non-commercial business losses: Commissioner's discretion. Accordingly, based on the evidence supplied, the Commissioner has determined that for those income years: 22. A Grower who would otherwise be required to defer a loss arising from their participation in the Project under subsection 35-10(2) until a later income year is able to offset that loss against their other assessable income in the year it is incurred. 23. The exercise of the Commissioner's discretion under paragraph 35-55(1)(b) 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 on in a materially different way from 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. 24. The following is a detailed contents list for this Ruling: Not previously issued as a draft


Appendix: Division 35 - deferral of losses from non-commercial business activities: 20. Division 35 applies to losses from certain business activities from the income year ended 30 June 2001 and subsequent years. Under the rule in subsection 35-10(2) a deduction for a loss incurred by an individual (including an individual in a general law partnership) from certain business activities will not be taken into account in an income year unless: | Exercise of Commissioner's discretion: 21. In deciding to exercise the discretion in paragraph 35-55(1)(b) on a conditional basis for the income years ended 30 June 2006 and 30 June 2007 , the Commissioner has applied the principles set out in Taxation Ruling TR 2007/6 Income tax: non-commercial business losses: Commissioner's discretion. Accordingly, based on the evidence supplied, the Commissioner has determined that for those income years: 22. A Grower who would otherwise be required to defer a loss arising from their participation in the Project under subsection 35-10(2) until a later income year is able to offset that loss against their other assessable income in the year it is incurred. 23. The exercise of the Commissioner's discretion under paragraph 35-55(1)(b) 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 on in a materially different way from 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.


What this Ruling is about | NOT LEGALLY BINDING SECTION: | A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. | If you rely on this ruling, we must apply the law to you in the way set out in the ruling (or in a way that is more favourable for you if we are satisfied that the ruling is incorrect and disadvantages you, and we are not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you. | No guarantee of commercial success: The Tax Office does not sanction or guarantee this product. Further, we give no assurance that the product is commercially viable, that charges are reasonable, appropriate or represent industry norms, or that projected returns will be achieved or are reasonably based. | Potential participants must form their own view about the commercial and financial viability of the product. We recommend a financial (or other) adviser be consulted for such information. | This Product Ruling provides certainty for potential participants by confirming that the tax benefits set out in the Ruling part of this document are available, provided that the scheme is carried out in accordance with the information we have been given, and have described below in the Scheme part of this document. If the scheme is not carried out as described, participants lose the protection of this Product Ruling. | Appendix 2 - Detailed contents list


Related rulings: TR 2007/6 PR 2001/15
Legislative references: ITAA 1997 Div 35 ITAA 1997 35-10 ITAA 1997 35-10(2) ITAA 1997 35-10(4) ITAA 1997 35-30 ITAA 1997 35-35 ITAA 1997 35-40 ITAA 1997 35-45 ITAA 1997 35-55 ITAA 1997 35-55(1)(b) SISA 1993 TAA 1953 TAA 1953 Sch 1 357-75(1) Copyright Act 1968
Subject references: non-commercial business losses