Class Ruling CR 2003/96
Date of effect: 1 July 2003


Class of entities or scheme: 3. The class of persons to which this Ruling applies is all growers who, after 1 July 2003, enter into a contract for the sale of barley by delivery or transfer into the 0:90:10 extended barley pool (0:90:10 pool) operated by AusBulk Grain Marketing Division (AusBulk GMD), a division of AusBulk Ltd (AusBulk). | Qualifications: 4. The Commissioner makes this Ruling based on the precise arrangement identified in this Ruling. 5. The class of persons defined in this Ruling may rely on its contents provided the arrangement actually carried out is carried out in accordance with the arrangement described below at paragraphs 9 to 11 in this Ruling. 6. If the arrangement actually carried out is materially different from the arrangement that is described in this Ruling, then: 7. 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: 8. This ruling applies to the income year commencing 1 July 2003 and subsequent years in which the arrangement is offered by AusBulk. However, the Ruling does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Ruling (see paragraphs 21 to 22 of the Taxation Ruling TR 92/20). Furthermore, the Ruling only applies to the extent that: 9. The arrangement that is the subject of this ruling is the 0:90:10 pool operated by AusBulk GMD and is described in the documents set out below. The relevant documents or parts of documents are: 10. When barley is delivered or transferred into the 0:90:10 pool, a grower accepts the terms and conditions set out in the 'AusBulk Grain Marketing Pools Standard Terms and Conditions'. 11. The AusBulk Grain Marketing Pools Standard Terms and Conditions provide that: | Sales of barley into the 0:90:10 pool: 12. For growers returning their income on an accruals basis, distributions made by AusBulk are included in assessable income under section 6-5 of the ITAA 1997, in the income year in which AusBulk declares each distribution. 13. For growers returning their income on a cash basis, distributions are included in assessable income under section 6-5 of the ITAA 1997, in the income year in which the grower receives the payments. | Trading stock: 14. The barley ceases to be trading stock of the grower under Division 70 of the ITAA 1997 at the time AusBulk accepts delivery of the barley. | Application of Part IVA: 15. Having regard to the facts of the arrangement, Part IVA of the ITAA 1936 does not apply. | Sales of barley into the 0:90:10 pool: 16. By delivering or transferring barley into the 0:90:10 pool, AusBulk and the grower enter into a contract of sale. At the time AusBulk accepts delivery of the grower's barley or approves an in-store transfer, the grower has sold and AusBulk has purchased the barley. 17. At the time growers sell their barley they have a right to receive payment of their share of the pool proceeds, but that right is not presently existing as the payment is neither quantified nor quantifiable. AusBulk quantifies the amount payable to growers by determining and declaring pool distributions. 18. The amount of the distribution is a presently existing recoverable debt for payment of that part of the pool return. The determination and declaration of the amount by AusBulk is the point at which this debt becomes presently existing, unconditional, and not subject to any contingency. 19. For growers returning their income on an accruals basis, distributions made by AusBulk are included in assessable income under section 6-5 of the ITAA 1997 in the income year in which AusBulk declares each distribution. 20. For growers returning income on a cash basis, distributions are included in assessable income under section 6-5 of the ITAA 1997 in the year in which the grower receives the payments. | Trading stock: 21. As stated at paragraph 16, the grower has sold and AusBulk has purchased the barley at the time AusBulk accepts delivery of the barley. 22. When accepted into the 0:90:10 pool by AusBulk, the barley delivered by the grower is mixed with that of other growers. Accordingly, the grower has lost dispositive power over the barley as the barley of that particular grower is no longer identifiable. In the circumstances title in the barley has passed to AusBulk and the grower has disposed of the barley (Farnsworth v. FC of T (1949) 78 CLR 504; (1949) 9 ATD 33). 23. Consequently, the barley ceases to be trading stock of the grower for the purposes of Division 70 of the ITAA 1997 at that time. | Application of Part IVA: 24. Having regard to the commercial character of the arrangement, Part IVA of the ITAA 1936 does not apply. 25. Below is a detailed contents list for this Class Ruling: Commissioner of Taxation 29 October 2003 Not previously released in draft form.

Ruling: Sales of barley into the 0:90:10 pool: 12. For growers returning their income on an accruals basis, distributions made by AusBulk are included in assessable income under section 6-5 of the ITAA 1997, in the income year in which AusBulk declares each distribution. 13. For growers returning their income on a cash basis, distributions are included in assessable income under section 6-5 of the ITAA 1997, in the income year in which the grower receives the payments. | Trading stock: 14. The barley ceases to be trading stock of the grower under Division 70 of the ITAA 1997 at the time AusBulk accepts delivery of the barley. | Application of Part IVA: 15. Having regard to the facts of the arrangement, Part IVA of the ITAA 1936 does not apply. | Sales of barley into the 0:90:10 pool: 16. By delivering or transferring barley into the 0:90:10 pool, AusBulk and the grower enter into a contract of sale. At the time AusBulk accepts delivery of the grower's barley or approves an in-store transfer, the grower has sold and AusBulk has purchased the barley. 17. At the time growers sell their barley they have a right to receive payment of their share of the pool proceeds, but that right is not presently existing as the payment is neither quantified nor quantifiable. AusBulk quantifies the amount payable to growers by determining and declaring pool distributions. 18. The amount of the distribution is a presently existing recoverable debt for payment of that part of the pool return. The determination and declaration of the amount by AusBulk is the point at which this debt becomes presently existing, unconditional, and not subject to any contingency. 19. For growers returning their income on an accruals basis, distributions made by AusBulk are included in assessable income under section 6-5 of the ITAA 1997 in the income year in which AusBulk declares each distribution. 20. For growers returning income on a cash basis, distributions are included in assessable income under section 6-5 of the ITAA 1997 in the year in which the grower receives the payments. | Trading stock: 21. As stated at paragraph 16, the grower has sold and AusBulk has purchased the barley at the time AusBulk accepts delivery of the barley. 22. When accepted into the 0:90:10 pool by AusBulk, the barley delivered by the grower is mixed with that of other growers. Accordingly, the grower has lost dispositive power over the barley as the barley of that particular grower is no longer identifiable. In the circumstances title in the barley has passed to AusBulk and the grower has disposed of the barley (Farnsworth v. FC of T (1949) 78 CLR 504; (1949) 9 ATD 33). 23. Consequently, the barley ceases to be trading stock of the grower for the purposes of Division 70 of the ITAA 1997 at that time. | Application of Part IVA: 24. Having regard to the commercial character of the arrangement, Part IVA of the ITAA 1936 does not apply. 25. Below is a detailed contents list for this Class Ruling: Commissioner of Taxation 29 October 2003 Not previously released in draft form.


Appendix: Sales of barley into the 0:90:10 pool: 16. By delivering or transferring barley into the 0:90:10 pool, AusBulk and the grower enter into a contract of sale. At the time AusBulk accepts delivery of the grower's barley or approves an in-store transfer, the grower has sold and AusBulk has purchased the barley. 17. At the time growers sell their barley they have a right to receive payment of their share of the pool proceeds, but that right is not presently existing as the payment is neither quantified nor quantifiable. AusBulk quantifies the amount payable to growers by determining and declaring pool distributions. 18. The amount of the distribution is a presently existing recoverable debt for payment of that part of the pool return. The determination and declaration of the amount by AusBulk is the point at which this debt becomes presently existing, unconditional, and not subject to any contingency. 19. For growers returning their income on an accruals basis, distributions made by AusBulk are included in assessable income under section 6-5 of the ITAA 1997 in the income year in which AusBulk declares each distribution. 20. For growers returning income on a cash basis, distributions are included in assessable income under section 6-5 of the ITAA 1997 in the year in which the grower receives the payments. | Trading stock: 21. As stated at paragraph 16, the grower has sold and AusBulk has purchased the barley at the time AusBulk accepts delivery of the barley. 22. When accepted into the 0:90:10 pool by AusBulk, the barley delivered by the grower is mixed with that of other growers. Accordingly, the grower has lost dispositive power over the barley as the barley of that particular grower is no longer identifiable. In the circumstances title in the barley has passed to AusBulk and the grower has disposed of the barley (Farnsworth v. FC of T (1949) 78 CLR 504; (1949) 9 ATD 33). 23. Consequently, the barley ceases to be trading stock of the grower for the purposes of Division 70 of the ITAA 1997 at that time. | Application of Part IVA: 24. Having regard to the commercial character of the arrangement, Part IVA of the ITAA 1936 does not apply.


What this Class Ruling is about | The number, subject heading, and the What this Ruling is about (including Tax law(s), Class of persons and Qualifications sections), Date of effect, Arrangement and Ruling parts of this document are a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953. CR 2001/1 explains Class Rulings and Taxation Rulings TR 92/1 and TR 97/16 together explain when a Ruling is a public ruling and how it is binding on the Commissioner. | What this Class Ruling is about: 1. This Ruling sets out the Commissioner's opinion on the way in which the 'tax law(s)' identified below apply to the defined class of persons, who take part in the arrangement to which this Ruling relates. | Tax law(s): 2. The tax laws dealt with in this Ruling are:


Related rulings: CR 2001/1 TR 92/1 TR 92/20 TR 97/16
Legislative references: ITAA 1936 Pt IVA ITAA 1997 6-5 ITAA 1997 Div 70 Copyright Act 1968 TAA 1953 Pt IVAAA
Case references: Farnsworth v. FC of T (1949) 78 CLR 504 (1949) 9 ATD 33
Subject references: barley growing crops as trading stock derivation of income primary production income