Class Ruling CR 2015/48
Date of effect: 1 July 2015

What this ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the relevant provisions identified below apply to the defined class of entities, who take part in the scheme to which this Ruling relates. Relevant provisions 2. The relevant provisions dealt with in this Ruling are: Class of entities 3. The class of entities to which this Ruling applies are individuals who hold Units in the MG Unit Trust ('Unitholders') and who: Qualifications 4. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 8 to 19 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then:

Class of entities or scheme: 3. The class of entities to which this Ruling applies are individuals who hold Units in the MG Unit Trust ('Unitholders') and who: | Qualifications: 4. The Commissioner makes this Ruling based on the precise scheme identified in this Ruling. 5. The class of entities defined in this Ruling may rely on its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 8 to 19 of this Ruling. 6. If the scheme actually carried out is materially different from the scheme that is described in this Ruling, then: 7. This Ruling applies from 1 July 2015 to 30 June 2016. The Ruling continues to apply after 30 June 2016 to all entities within the specified class who entered into the specified scheme during the term of the Ruling. However, this Ruling will not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of this Ruling (see paragraphs 75 and 76 of Taxation Ruling TR 2006/10). 8. The following description of the scheme is based on information provided by the applicant. The following documents, or relevant parts of them form part of and are to be read with the description: Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. 9. Murray Goulburn is an Australian dairy foods company. 10. Murray Goulburn is an unlisted company, operating under co-operative principles whereby it is 100 per cent dairy farmer controlled. Ordinary Shares are held by are dairy farmers who are active suppliers of milk to Murray Goulburn ('Shareholders'). 11. Under the Murray Goulburn Capital Structure, Murray Goulburn will establish the MG Unit Trust. 12. The MG Unit Trust is a special purpose funding vehicle, listed on the Australian Securities Exchange. 13. Funds raised by the MG Unit Trust from Unitholders will be invested into Murray Goulburn through Notes which will provide Unitholders with economic exposure to Murray Goulburn. The Notes will be held by MG Unit Trust through a sub-trust. 14. The Notes are a non-share equity interest in Murray Goulburn for the purposes of the ITAA 1997. 15. The Notes carry a right to distributions ('Note Distributions'). The Note Distributions must be the same as dividends paid to Shareholders of Murray Goulburn. 16. The payment of dividends (and therefore Note Distributions) is at the discretion of the Board of Murray Goulburn. The payment will be determined in accordance with the Profit Sharing Mechanism outlined in the MG Unit Trust Product Disclosure Statement. 17. The Note Distributions will flow through MG Unit Trust (via the sub-trust) to Unitholders. The calculation, payment, and flow-through of Note Distributions will be such that Unitholders will receive distributions on Units that will be the same as dividends paid by Murray Goulburn on Shares. 18. The Note Distributions which flow indirectly to Unitholders will be frankable distributions under section 202-40 of the ITAA 1997. It is anticipated that dividends paid to Shareholders, and therefore distributions paid to Unitholders, will be franked to the extent the Board of Murray Goulburn considers appropriate. 19. This ruling is made on the basis that MG Unit Trust (and the sub-trust holding the Notes on behalf of MG Unit Trust) are 'qualified persons' in respect of the Note Distributions, within the meaning of Division 1A of former Part IIIAA of the ITAA 1936. | Gross-up and tax offset: 20. For the purposes of section 207-50 of the ITAA 1997, franked Note Distributions paid by Murray Goulburn to the MG Unit Trust (via the sub-trust) will flow indirectly to the Unitholders. 21. Where franked Note Distributions paid to the MG Unit Trust (via the sub-trust) flow indirectly to Unitholders who are Australian resident individuals: | Gross-up and tax offset denied in certain circumstances: 22. Provided the sub-trust, MG Unit Trust and the Unitholder are a 'qualified person' in respect of the Note Distributions, within the meaning of Division 1A of former Part IIIAA of the ITAA 1936, none of the circumstance in subsection 207-150(1) of the ITAA 1997 exists which would deny the gross-up or tax offset treatment for Unitholders to whom the Note Distribution flows indirectly. 23. The Unitholders will be a qualified person in respect of the Note Distributions provided that: Commissioner of Taxation 8 July 2015 | Gross-up and tax offset: 24. For the purposes of section 207-50 of the ITAA 1997, franked Note Distributions paid by Murray Goulburn to the MG Unit Trust (via the sub-trust) will flow indirectly to the Unitholders. 25. In addition to including in the assessable income of the Unitholders an amount attributable to their share of the franked distribution received from the MG Unit Trust, an amount attributable to the Unitholder's share of the franking credit on the franked distribution will also be included in their assessable income under subsection 207-35(3) of the ITAA 1997. 26. Where franked Note Distributions paid to the MG Unit Trust (via the sub-trust) flow indirectly to Unitholders who are Australian resident individuals, and the whole or part of the distributions are included in their assessable income along with an amount equal to their share of the franking credits attached to the franked distributions, then pursuant to section 207-45 of the ITAA 1997, the Unitholder is entitled to a tax offset equal to the Unitholder's share of the franking credit attached to the franked distribution. | Gross-up and tax offset denied in certain circumstances: 27. Subdivision 207-F of the ITAA 1997 creates the appropriate adjustment to cancel the effect of the gross-up and tax offset rules where an entity has manipulated the imputation system in a manner that is not permitted under the income tax law. Section 207-150 of the ITAA 1997 is relevant to the Unitholders that are subject to this Ruling. 28. Provided sub-trust, MG Unit Trust and the Unitholder are a 'qualified person' in respect of the Note Distributions, within the meaning of Division 1A of former Part IIIAA of the ITAA 1936, none of the circumstance in subsection 207-150(1) of the ITAA 1997 exists which would deny the gross-up or tax offset treatment for Unitholders to whom the Note Distribution flows indirectly. 29. The Unitholders will be a qualified person in respect of the Note Distributions provided that: 30. The following is a detailed contents list for this Ruling: © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft

Ruling: Gross-up and tax offset: 20. For the purposes of section 207-50 of the ITAA 1997, franked Note Distributions paid by Murray Goulburn to the MG Unit Trust (via the sub-trust) will flow indirectly to the Unitholders. 21. Where franked Note Distributions paid to the MG Unit Trust (via the sub-trust) flow indirectly to Unitholders who are Australian resident individuals: | Gross-up and tax offset denied in certain circumstances: 22. Provided the sub-trust, MG Unit Trust and the Unitholder are a 'qualified person' in respect of the Note Distributions, within the meaning of Division 1A of former Part IIIAA of the ITAA 1936, none of the circumstance in subsection 207-150(1) of the ITAA 1997 exists which would deny the gross-up or tax offset treatment for Unitholders to whom the Note Distribution flows indirectly. 23. The Unitholders will be a qualified person in respect of the Note Distributions provided that: Commissioner of Taxation 8 July 2015


Appendix: Gross-up and tax offset: 24. For the purposes of section 207-50 of the ITAA 1997, franked Note Distributions paid by Murray Goulburn to the MG Unit Trust (via the sub-trust) will flow indirectly to the Unitholders. 25. In addition to including in the assessable income of the Unitholders an amount attributable to their share of the franked distribution received from the MG Unit Trust, an amount attributable to the Unitholder's share of the franking credit on the franked distribution will also be included in their assessable income under subsection 207-35(3) of the ITAA 1997. 26. Where franked Note Distributions paid to the MG Unit Trust (via the sub-trust) flow indirectly to Unitholders who are Australian resident individuals, and the whole or part of the distributions are included in their assessable income along with an amount equal to their share of the franking credits attached to the franked distributions, then pursuant to section 207-45 of the ITAA 1997, the Unitholder is entitled to a tax offset equal to the Unitholder's share of the franking credit attached to the franked distribution. | Gross-up and tax offset denied in certain circumstances: 27. Subdivision 207-F of the ITAA 1997 creates the appropriate adjustment to cancel the effect of the gross-up and tax offset rules where an entity has manipulated the imputation system in a manner that is not permitted under the income tax law. Section 207-150 of the ITAA 1997 is relevant to the Unitholders that are subject to this Ruling. 28. Provided sub-trust, MG Unit Trust and the Unitholder are a 'qualified person' in respect of the Note Distributions, within the meaning of Division 1A of former Part IIIAA of the ITAA 1936, none of the circumstance in subsection 207-150(1) of the ITAA 1997 exists which would deny the gross-up or tax offset treatment for Unitholders to whom the Note Distribution flows indirectly. 29. The Unitholders will be a qualified person in respect of the Note Distributions provided that:


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, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is 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. | Appendix 2 - Detailed contents list


Related rulings: TR 2006/10
Legislative references: ITAA 1936 ITAA 1936 Pt IIIAA Div 1A ITAA 1936 160APHJ ITAA 1936 160APHN ITAA 1997 ITAA 1997 Subdiv 207-F ITAA 1997 207-35(3) ITAA 1997 207-50 ITAA 1997 207-45 ITAA 1997 207-150(1)