Product Ruling PR 2009/11
Date of effect: 18 March 2009

What this ruling is about: 1. 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 2007 Macgrove Project (2009 Growers) or simply as 'the Project'. Class of entities 2. This part of the Product Ruling specifies which entities: set out in the Ruling section of this Product Ruling. The class of entities who can rely on the tax benefits set out in this Ruling are referred to as Growers. 3. Growers will be those entities that are accepted to participate in the scheme specified below on or after the date this Product Ruling is made and who have executed the relevant Project Agreements set out in paragraph 27 of this Ruling on or before 15 June 2009. They will stay in the scheme until its completion and derive assessable income from this involvement. 4. 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: 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 its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 27 to 110 of this Ruling. 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: set out in the Ruling section of this Product Ruling. The class of entities who can rely on the tax benefits set out in this Ruling are referred to as Growers. 3. Growers will be those entities that are accepted to participate in the scheme specified below on or after the date this Product Ruling is made and who have executed the relevant Project Agreements set out in paragraph 27 of this Ruling on or before 15 June 2009. They will stay in the scheme until its completion and derive assessable income from this involvement. 4. 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: | 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 its contents provided the scheme actually carried out is carried out in accordance with the scheme described in paragraphs 27 to 110 of this Ruling. 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 Product Ruling applies prospectively from 18 March 2009, the date it is published. It therefore applies only to the specified class of entities that enter into the scheme from 18 March 2009 until 15 June 2009 being the closing date for entry into the scheme. This Product Ruling provides advice on the availability of tax benefits to the specified class of entities for the income years up to 30 June 2011 being its period of application. This Product Ruling will continue to apply to those entities even after its period of application has ended for the scheme entered into during the period of application. 10. 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. | Changes in the law: 11. Although this Product Ruling deals with the income tax 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 this Product Ruling and, to that extent, this Product Ruling will have no effect. 12. 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: 13. 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. | Goods and Services Tax: 14. All fees and expenditure referred to in this Product Ruling include the Goods and Services Tax (GST) where applicable. In order for an entity (referred to in this Ruling as a Grower) to be entitled to claim input tax credits for the GST included in its expenditure, it must be registered or required to be registered for GST and hold a valid tax invoice. | Application of this Ruling: 15. Subject to the stated qualifications, this part of the Product Ruling sets out in detail the taxation obligations and benefits for a Grower in the defined class of entities who enters into the scheme described at paragraphs 27 to 110 of this Ruling. 16. The Grower's participation in the Project must constitute the carrying on of business of primary production. Provided the project is carried out as described below, the Grower's business of primary production will commence at the time of execution of their Management Agreement and Sub Leases by Maccacorp Limited under the Power of Attorney given to Maccacorp Limited by the Grower. | Small business concessions: 17. From the 2007-08 income year, a range of concessions previously available under the Simplified Tax System will be available to an entity if it carries on a business and satisfies the $2 million aggregated turnover test (a 'small business entity'). 18. A small business entity can choose the concessions that best suit its needs. Eligibility for some small business concessions is also dependent on satisfying some additional conditions. Accordingly, unless otherwise stated, application of the small business concessions to Growers who qualify as a 'small business entity' is not able to be dealt with in this Ruling. | Section 6-5: 19. That part of the gross sales proceeds from the Project attributable to the Grower's produce, less any GST payable on those proceeds (section 17-5), will be assessable income of the Grower under section 6-5 in the year in which it is derived. | Sections 8-1 and 25-20 and Division 27 of the ITAA 1997 and sections 82KZME and 82KZMF of the Income Tax Assessment Act 1936: 20. A Grower may claim deductions, on a per Macgrove basis, for the following expenditure set out in the Table below. | Division 40: 21. Each Grower will also be entitled to a tax deduction relating to the decline in value of the macadamia trees planted on the Macgrove, on a per Macgrove basis as set out in the Table below. | Joint Venturers: 22. A Joint Venture Grower may claim deductions, on a per Macgrove basis, for the following expenditure set out in the Tables and Notes in paragraph 20 of this Ruling: 23. Each Joint Venturer can also claim deductions for its 50% proportional share of the Performance Incentive Fee, and 50% proportional share of the horticultural plant write-off as set out in the Table & Notes in paragraph 20 of this Ruling. | Section 35-55 - exercise of Commissioner's discretion: 24. Growers who will stay in the Project until its completion will be considered to be carrying on a business of primary production. Such Growers who are individuals and accepted into the Project in the year ended 30 June 2009 may make losses from the Project that may be affected by the loss deferral rule in section 35-10 in Division 35. 25. The discretion in paragraph 35-55(1)(b) will be exercised for such Growers to who the loss deferral rule would otherwise apply, as follows: Exercise of the discretion in this case however is conditional on the Project being carried out in the manner described in paragraphs 27 to 110 of this Ruling, but will allow Growers referred to who make losses, to offset against their other assessable income in the income years in which those losses arise. | Sections 82KZME, 82KZMF and 82KL and Part IVA: 26. For a Grower who commences participation in the Project and incurs expenditure as required by the Constitution, Management Agreement and Sub Leases the following provisions of the ITAA 1936 have application as indicated: 27. The scheme that is the subject of this Ruling is identified and described in the following documents: Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. 28. The documents highlighted are those that a Grower may enter into. For the purposes of describing the scheme to which this Ruling applies, there are no other agreements, whether formal or informal, and whether or not legally enforceable, which a Grower, or any associate of a Grower, will be a party to, which are a part of the scheme. The effect of these agreements is summarised below. 29. All Australian Securities and Investment Commission (ASIC) requirements are, or will be, complied with for the term of the agreements. The effect of these agreements is summarised as follows. | Overview: 30. All capitalised terms within this ruling are capitalised terms within the scheme documentation. The main features of the Project are as follows: 31. The Project is a registered managed investment scheme under the Corporations Act 2001 (Corporations Act). Maccacorp Limited (Maccacorp) has been granted an Australian Financial Services Licence (Licence No 296213) and will be the Responsible Entity for the Project. 32. An offer to participate in the Project will be made through a Third Supplementary Product Disclosure Statement (SPDS) which is to be read in conjunction with: 33. PR 2006/163 issued for Early Growers who entered the Project from 20 December 2006 to 15 June 2007. PR 2007/74 issued for Late Growers who entered the Project from 8 August 2007 to 15 June 2008. This ruling deals with offers made under the SPDS and only applies to Growers who enter into the Project from 18 March 2009 to 15 June 2009. 34. The offer under the SPDS is for 68 established Macgroves totalling approximately 27.2 hectares in the Project. Participants will be invited to subscribe for a minimum of one Macgrove, comprising 0.4 hectares. The Trees have been planted on each Grower's Macgrove and all other establishment activities will be completed by the time of acceptance of each Grower's application to participate in the Project. This ruling has no application to Growers accepted to participate in the Project before 18 March 2009 and after 15 June 2009. 35. PR 2006/163 was issued in respect of the original PDS on 20 December 2006 for the Project's Early Growers, based on a Minimum Subscription of 100 established Macgroves. Minimum Subscription was achieved on 7 May 2007. There is no Minimum Subscription for this latest offer. 36. Entities associated with Maccacorp may apply for established Macgroves. However, entities associated with Maccacorp will not take up more than 20 percent of the total number of issued established Macgroves. Each of the entities associated with Maccacorp will be: 37. This Product Ruling will have no application if entities associated with Maccacorp purchase Macgroves and fail to pay the same fees at the same time as other Growers. In this context, payment means that Maccacorp is paid with real money that does not include the use of bridging finance, promissory notes or other such instruments. 38. The Project involves the commercial growing, cultivation and harvesting of Macadamia Nuts for sale. 39. Applications to participate in the Project must be made using the Application and Power of Attorney Form included in the PDS. By completing this Form, the Grower agrees to allow Maccacorp to enter into, execute and otherwise deal with Project Agreements (being the Sub Leases, Management Agreement and Sale Agreement) on their behalf. A custodian will be appointed under the Custody Agreement to hold the Project Assets for the Growers. 40. Maccacorp will allocate established Macgroves to those Applicants accepted as Growers in the Project and establish and maintain a register of Growers throughout the term of the Project. 41. Applicants who are accepted to participate in the Project and who execute the Sub Leases and Management Agreement from the date of this Ruling to on or before 15 June 2009, will become 2009 Growers. 42. The Project Land on which Growers will be growing and cultivating the Trees for the production of Macadamia Nuts is situated at 92 Kenzler Road, Sharon via Bundaberg, Queensland. Maccacorp entered into a Lease with the Land Owner for the Land on 30 September 2006. There are three dams on the land with a total capacity of approx 400 mega litres as well as Water Allocations Nos 360 and 379 for a total of 238 mega litres per annum. The Lease has been registered with the Registrar of Titles, Queensland. 43. Maccacorp will grant the Growers three consecutive Sub Leases to use and occupy one or more identifiable established Macgroves. The collective terms of the Sub Leases (ten years, eight years and one year) correspond to the 19-year term of the Project. Under the first Sub Lease, the Grower agrees to maintain the Orchard in accordance with the Management Plan and in a manner that is consistent with best agricultural practice. The Trees and all Improvements are and remain the property of the Land Owner. 44. Each Grower will enter into a Management Agreement with Maccacorp to cultivate and maintain the Trees and be responsible for harvesting, procuring the processing of and selling the macadamia nuts on behalf of the Grower. 45. Maccacorp has entered into the Sale Agreement with Macadamia Processing Co Limited (MPC) to sell the entire Crop produced from the Orchard during the duration of the Project at prices and on terms that are no less favourable than arms length terms. 46. As an alternative to participation by a Grower as a single entity, the terms of the Constitution and the Management Agreement provide that two Growers may enter into a 'Joint Venture' to subscribe for a Macgrove(s). | Constitution: 47. The Constitution establishes the Project and operates as a deed binding on each Grower and Maccacorp (clause 2.1). The Constitution sets out the terms and conditions under which Maccacorp agrees to act as the Responsible Entity and thereby manage the Project. Upon acceptance into the Project, Growers are bound by the Constitution by virtue of their participation in the Project. 48. The Project is established for the purpose of: 49. The Term of the Project ends upon the earliest of: Upon the termination of the Project, all of the rights and obligations under the Project Agreements will cease and each Project Agreement will be automatically terminated. 50. In order to become a Grower in the Project, an Applicant must lodge an Application and pay to the Responsible Entity the amount of $11,000 in respect of each established Macgrove on the terms and conditions specified in the PDS and SPDS which is current at the date of lodging the relevant Application and the Application must be accepted by the Responsible Entity (clause 3). For this Product Ruling to apply the 'current' PDS under which a Grower is accepted must be materially the same as the PDS dated 8 January 2007, as amended by: 51. The amount payable under clause 3 represents the Management Fee payable for the Initial Orchard Maintenance Services to be provided in the First Financial Year in respect of each established Macgrove, pursuant to the Management Agreement. 52. Each Application for an Interest must: 53. The Responsible Entity may accept Applications where the Application contains all of the material required as detailed in paragraph 52 of this Ruling and the Application Money has been paid (clause 13.2). Upon accepting an Application, the Responsible Entity will allocate to the Applicant that number of established Macgroves in respect of which the Application has been accepted by the Responsible Entity (clause 14.1). 54. The Responsible Entity must establish and maintain a register of Growers throughout the Term of the Project (clause 14.2). 55. If any Application is refused then the Responsible Entity must refund any Application Money to the Applicant concerned within five Business Days after the refusal (clause 13.3). 56. The Responsible Entity must open two Project accounts with a bank or other financial institution. One account will be the Application Fund (into which will be deposited all money received from Applicants) and the other will be the Proceeds Fund (into which will be deposited all money generated from the Project for the Growers of the Project, excluding the Application Money). However, in certain limited circumstances the Responsible Entity may use one account only (clause 12.2). The Responsible Entity may transfer money paid by an Applicant from the Application Fund to the Responsible Entity for the purposes of the Project where the Responsible Entity has issued an Interest to the Applicant (clause 15.1). 57. Each Applicant has an interest in the Application Fund equal to the proportional interest that Applicant's Application Money bears to the total Application Money paid by all Applicants. However, an Applicant does not have any interest in any particular part of the Application Fund or in any Investment (clause 16.1). 58. Each Grower directly owns their Grower Interest, including: 59. The Grower's Interest does not include the Trees or any of the Improvements which will at all times remain the property of the Land Owner (clause 16.3). 60. Each Grower has an interest in the Proceeds Fund equal to the Grower's Proportion, which is defined as the proportion that the area of the Grower's established Macgroves bears to the total area of all established Macgroves registered to Growers in that Financial Year (clause 16.2). 61. Where an event occurs to which any insurance policies apply, the insurance proceeds will be dealt with as follows: 62. The Responsible Entity must harvest all of the Macadamia Nuts grown on Trees in each Grower's Macgrove in accordance with the Management Agreements and may store, market and sell the Crop harvested in accordance with the terms of any Sale Agreement (clause 25.1). Macadamia Nuts grown during the term of the Project will be sold under the Nut in Shell Supply Agreement discussed in paragraphs 96 and 97 of this Ruling. 63. The Responsible Entity must pay into the Proceeds Fund: | Supplementary Constitution: 64. The principal purposes of this document are to firstly, change the name of the Constitution of the 2006 Macgrove Project, to the Constitution of the 2007 Macgrove Project and secondly, to amend the Constitution and Management Agreement to provide for the situation where two entities participate in the Project as Joint Venturers. 65. Joint Venturers are known as First Joint Venturer and Second Joint Venturer, and are apportioned specific responsibilities, rights and entitlements under clause 35 of the Constitution. 66. Each of the First Joint Venturer and the Second Joint Venturer are responsible for the payment of Management Fees, Grower's Expenses, and Rent over the Term of the Project in the manner stated at paragraphs 105 to 108 of this Ruling. Both the First Joint Venturer and the Second Joint Venturer are entitled to a Prescribed Proportion of 50% of the Joint Venture Assets, as defined in clause 1.1. | Second Supplementary Constitution: 67. The principal purposes of this document are to firstly, provide for 2009 Growers to invest in the project, and secondly, to amend the responsibilities, rights and entitlements of 2009 Growers who participate in the project as Joint Venturers. 68. As per the amended constitution, 2009 Grower means a person whose Application is accepted after 1 July 2008 and on or before 15 June 2009. 69. For 2009 Growers who participate in the Project as Joint Venturers, the First Joint Venturer is entitled to a Prescribed Proportion of the Joint Venture Assets of 50% and the Second Joint Venturer is entitled to a Prescribed Proportion of the Joint Venture Assets of 50%. | Compliance Plan: 70. The Plan describes how the Responsible Entity will operate the Project and ensure that it complies with the Corporations Act, the Constitution and with any other operating requirements set down by the board of Directors of the Responsible Entity. 71. The principal purpose of the Compliance Plan is to ensure that the interests of Growers are protected. The Plan sets out the systems and methods by which the Responsible Entity, its officers, agents, contractors and employees will ensure that the Project and the Responsible Entity continue to comply with all relevant parts of the Corporations Act and the Constitution and continuously monitor and review such compliance. | Supplementary Compliance Plan: 72. This Plan changes all references to the 2006 Macgrove Project in the Compliance Plan to the 2007 Macgrove Project. It also amends certain definitions in clause 1 to reflect the changes in the arrangement from the 2006 Macgrove Project. The 2006 Macgrove Project did not proceed because Minimum Subscription was not reached. | Lease: 73. Maccland leases the Land to Maccacorp for the Term of the Project, in return for the 'Rent' (clause 2). The Land is located at 92 Kenzler Road, Sharon via Bundaberg, Queensland, being Lots 3 and 4 on RP866764, Lot 1 on SP 199369, and Lot 60 on CP CK2025. The Term of the Lease is the period commencing on 30 September 2006 and ending 30 June 2028. The Rent is the total of rental received by Maccacorp under all sub lease agreements including, but not limited to the Sub Leases between Maccacorp and the Growers, which shall be due and payable on 1 July in each Financial Year commencing 1 July 2007 (clause 3). 74. The Lessee may give the Lessor a notice asking the Lessor to grant the Lessee a further lease for the period of five years commencing on the day following the expiration of the initial Term of the Lease. This is known as the First Option Period. 75. The Lessee may give the Lessor a notice asking the Lessor to grant the Lessee a further lease for the period of four years commencing on the day following the expiration of the First Option Period. This is known as the Second Option Period. 76. Under the Lease, Maccacorp: 77. Under the Lease, Maccland will provide Access Roads for use by Maccacorp and Maccacorp's employees and will maintain the supply of the Irrigation Water and will renew water allocations and licences as and when required (clauses 9.5 and 9.6). Maccacorp at its own cost keep and maintain with a reputable insurer insurance against public risk and occupiers liability and damage to the Land by fire or other insurable risks (clause 10.1) | Sub Leases: 78. Each Grower will execute three Sub Leases with the Responsible Entity as the Lessor. Under the Sub Leases, the Lessor leases to the Grower the Grower's established Macgrove together with the right to use in common with the Lessor and other participants in the Project the Common Area for the Term from the Commencement Date on and subject to the terms and conditions set out in the Sub Leases (clause 2). Common Area means those parts of the Land provided by the Lessor from time to time for common use by the Grower and the Lessor and/or other Growers who are occupants of the Land and is more particularly described in Item 5 of Schedule 1. 79. Each Sub Lease will be entered at the same time. The commencement and expiry dates of each Sub Lease are as follows: 80. The Grower may give the Lessor a notice asking the Lessor to grant the Lessee a further lease for the period of five years commencing on the day following the expiration of the initial Term of the Third Sub Lease. This is known as the First Option Period. 81. The Grower may give the Lessor a notice asking the Lessor to grant the Lessee a further lease for the period of four years commencing on the day following the expiration of the First Option Period. This is known as the Second Option Period. 82. The Growers must pay to Maccacorp, in respect of each Financial Year during the Term, the Rent in accordance with Item 3 of Schedule 1. There is no Rent payable for the First Financial Year. The Rent for the second and each successive Financial Year of the Term is due and payable on 1 July in each Financial Year, commencing 1 July 2009. 83. Under the Sub Leases the Grower: 84. Unless inconsistent with the Management Plan the Grower will do or will cause to be done, the following: | 2009 Grower Management Agreement: 85. Under clauses 4 and 5 of this Agreement the Grower engages the Manager during the Term of the Project to perform all services necessary to maintain a macadamia nut tree orchard on the Grower's Macgrove, harvest the Macadamia Nuts and sell the Crop on behalf of the Grower (referred to as the 'Orchard Services'). The Term of the Project commences on the Commencement Date (being the date of execution of the Management Agreement) and is expected to end on 30 June 2028. 86. If the Grower exercises the first five year option to extend the term of the Sub Lease, then the Term of this agreement is automatically deemed extended by five years. If the Grower exercises the second four year option to further extend the term of the Sub Lease, then the Term of this agreement is automatically deemed extended by a further four years (clause 3). 87. Specifically clause 5 of the Agreement states that the Manager will: 88. The Initial Orchard Maintenance Services that must be provided by the Manager in the first Financial Year are set out in Schedule 2 to the Management Agreement and the Orchard Maintenance Services that must be provided by the Manager in the second and subsequent Financial Years are set out in Schedule 3 of that Agreement. 89. The Grower must pay the Management Fee to the Manager for the Orchard Services set out in clause 5. The Management Fee for each Financial Year is specified in Column 3 of Item 5 of Schedule 1. 80% of the Management Fee is in respect of performing, or causing to be performed, the Orchard Services and the remaining 20% of the Management Fee is remuneration payable to the Manager as Responsible Entity of the Project for managing that performance. The Management Fee is payable in advance on the date stated in Column 4 of Item 5 of Schedule 1. 90. The Manager will, at the Grower's cost, maintain with a reputable insurer a policy of insurance against public risk and occupier's liability and against damage to the Grower's Macgrove that is caused by fire or other insurable risks provided that in the opinion of the Manager the costs of any such insurance are economically justified. The Manager is not required to take out crop insurance unless specifically agreed between the Manager and the Grower from year to year. All such policies of insurance must be in the names of or note the interests of the Land Owner and the Grower (clause 12). | Pooling of amounts and distribution of the Proceeds Fund: 91. The Constitution (clause 25) sets out provisions relating to the pooling of amounts from the sale of each Grower's Macadamia Nuts and the distribution of the Grower's Proportion of the Proceeds Fund from that sale or from insurance proceeds. This Product Ruling only applies where the following principles apply to those pooling and distribution arrangements: | Principal Subcontractor's Agreement: 92. Maccacorp, the Responsible Entity, appoints the Maccmanagement Pty Limited as Principal Subcontractor, to provide the Services as an independent contractor during the Term. Under this Agreement, Maccmanagement Pty Limited (Maccmanagement) has agreed to provide the Orchard Establishment Services as detailed in Schedule 1, establish the Orchard and provide all necessary services to maintain the Orchard on the Land including the Initial Orchard Maintenance Services and the Orchard Maintenance Services (as defined in the Management Agreement) (clause 3). Maccmanagement will also provide a written report on the Services provided and details of the health and vigour of the Orchard (clause 3.3) 93. The Orchard Establishment Services include the preliminary works, selection of suitable macadamia trees, the planting of the macadamia trees and installation of a modern cost effective irrigation system. 94. The Principal Subcontractor must complete the Orchard Establishment Services in respect of the Macgroves of each Grower by the time of acceptance of each such Grower's application to participate in the Project. 95. This Agreement commences on the Commencement Date, 9 August 2007 (being the date of the Agreement) and ends on the second anniversary of the Commencement Date, 9 August 2009 (Initial Term). By mutual agreement, the Initial Term may be extended by two-year periods or for such other period as may be agreed by the Parties (clause 6). | Nut-In-Shell Supply Agreement: 96. Under this Agreement Maccacorp agrees to sell and Macadamia Processing Co Limited (MPC) agrees to buy, all Macadamia Nut-In-Shell produced on the Project Property from the date of the Agreement (9 December 2005). 97. Each year MPC will pay to Maccacorp the average selling price per kilogram obtained by MPC for the finished product after deducting all reasonable expenses and provisions of MPC. | Custody Agreement: 98. In accordance with clause 4.1 of the Constitution, the Project Property will be held by the Responsible Entity on trust for the Growers from the Term of the Project. The Responsible Entity may appoint an agent or custodian to hold the Project Property separately from any other property (clause 4.2 of the Constitution). Under this Agreement, Maccacorp appoints Perpetual Nominees Limited (Perpetual) as custodian of the Project Assets and Perpetual accepts that appointment. | Fees: 99. The fees payable under clause 14 of the Management Agreement for each Macgrove are set out in Item 5 of Schedule 1, as follows. | Performance Incentive Fee: 100. The Grower must pay a Performance Incentive Fee where applicable (clause 14.6). The Performance Incentive Fee payable in each Financial Year is 25% of any net proceeds of sale of the Crop attributable to a Macgrove that exceeds the Performance Incentive Threshold (as defined in the Management Agreement) in the Financial Year (Item 6 of Schedule 1). The Performance Incentive Fee will only commence from 1 July 2010 as the Trees reach maturity. The Performance Incentive Fees will be deducted from the proceeds of nut-in-shell sales. | Rent: 101. The fee payable under clause 3 of the Sub Leases for each Macgrove is set out in Item 3 of Schedule 1, as follows: | Grower's Expenses: 102. Grower's Expenses includes all stamp duty and registration fees in respect of the Management Agreement plus the Grower's portion of all premiums for insurance taken out by the Manager in accordance with clause 12 of the Management Agreement. 103. The Manager will maintain, with a reputable insurer, a policy of insurance against public risk and occupier's liability and against damage to the Grower's Macgrove that is caused by fire or other insurable risks provided that in the opinion of the Manager the costs of any such insurance are economically justified (clause 12.1 of the Management Agreement). 104. Grower's Expenses are payable within 30 days of written notification by the Responsible Entity to the Grower of the amount of the Grower's Expenses (clause 14.5 of the Management Agreement). | Joint Venture: 105. Fees payable per Macgrove by a Grower who is in a Joint Venture are as stipulated in the new paragraph 35.5(c) of the Second Supplementary Constitution. Under this clause, the amounts of fees for which a Joint Venture Grower will be solely responsible are expressed as percentages of the fees outlined in paragraphs 99 to 104 of this Ruling. 106. The First Joint Venturer will be solely responsible for paying the following fees and other amounts: 107. The Second Joint Venturer will be solely responsible for paying the following fees and other amounts: 108. Each Joint Venturer is liable for paying their Prescribed Proportion (being defined in the Supplementary Constitution as 50% each) of any Performance Incentive Fees and each will be entitled to the Prescribed Proportion of the Joint Venturer's Macadamia Nuts Crop and the Joint Venture Proceeds (clause 35.6 of the Second Supplementary Constitution). | Finance: 109. There is no financing facility offered by the Manager or any other party to the arrangement. Growers can fund their investment in the Project themselves or borrow from an independent lender. Growers cannot rely on any part of this Ruling if the Application Fee is not paid in full on or before 15 June 2009. Where the Application fee is being financed through a lending institution written evidence of approval must be provided to the Responsible Entity by the lending institution on or before 15 June 2009. The lending institution must provide the full amount of the loan monies to Responsible Entity no later than 30 June 2009. 110. This Ruling does not apply if the finance arrangement entered into by the Grower includes or has any of the following features: Commissioner of Taxation 18 March 2009 | Is the Grower carrying on a business?: 111. For the amounts set out in paragraphs 20 to 23 of this Ruling to constitute allowable deductions the Grower's macadamia horticultural activities as a participant in the 2007 Macgrove Project (2009 Growers) must amount to the carrying on of a business of primary production. 112. The general indicators used by the Courts in determining whether an entity is carrying on a business are set out in Taxation Ruling TR 97/11 Income tax: am I carrying on a business? 113. More recently, and in relation to a managed investment scheme similar to that which is the subject of this Ruling, the Full Federal Court in Hance v. FC of T ; Hannebery v. FC of T [2008] FCAFC 196; 2008 ATC 20-085 applied these principles to conclude that 'Growers' in that scheme were carrying on a business of producing almonds (at FCAFC 90; ATC 90). 114. Application of these principles to the arrangement set out above leads to the conclusion that Growers (as described in paragraphs 2 to 4 in this Ruling), who will stay in the Project until its completion, will be carrying on a business of primary production involving growing and harvesting Macadamia Nuts for sale. | Section 8-1: 115. The Management Fees, Rent, Grower's Expenses and Performance Incentive Fees are deductible under section 8-1. A 'non-income producing' purpose is not identifiable in the arrangement and there is no capital component evident in the Management Fees, Rent, Grower's Expenses and Performance Incentive Fees. 116. The tests of deductibility under the first limb of section 8-1 are met. The exclusions do not apply. If the prepayment provisions do not apply (see paragraphs 119 to 123 of this Ruling) a deduction for these amounts can be claimed in the year in which they are incurred. (Note: the meaning of incurred is explained in Taxation Ruling TR 97/7.) 117. The deductibility of interest incurred by Growers who finance their participation in the Project through a loan facility with a bank or other financier is outside the scope of this Ruling. A Grower may request a private ruling on the deductibility or otherwise of interest incurred under finance arrangements that are not covered by this Product Ruling. | Section 25-20: 118. Applying the same principles as that used for the Management Fees, Rent, Grower's Expenses and Performance Incentive Fees, a fee for registering and stamping the Sub Leases is a lease document expense incurred for acquiring a sub lease over a property that is used or is to be used during the Term of the Project solely for income producing purposes, has sufficient connection with the gaining of assessable income to be deductible under section 25-20. | Sections 82KZL to 82KZMF: 119. The prepayment provisions contained in Subdivision H of Division 3 of Part III of the ITAA 1936 affect the timing of deductions for certain prepaid expenditure. These provisions apply to certain expenditure incurred under an agreement in return for the doing of a thing under the agreement (for example, the performance of management services or the leasing of land) that will not be wholly done within the same year of income as the year in which the expenditure is incurred. If expenditure is incurred to cover the provision of services to be provided within the same year, then it is not expenditure to which the prepayment rules apply. 120. For this Project, the only prepayment provisions that are relevant are section 82KZL of the ITAA 1936 (an interpretive provision) and sections 82KZME and 82KZMF of the ITAA 1936 (operative provisions). | Application of the prepayment provisions to this Project: 121. Under the scheme to which this Product Ruling applies Management Fees and Rent are incurred annually. Accordingly, the prepayment provisions in sections 82KZME and 82KZMF of the ITAA 1936 have no application to this scheme. 122. However, sections 82KZME and 82KZMF of the ITAA 1936 may have relevance if a Grower in this Project prepays all or some of the expenditure payable under the Management Agreement and/or the Sub Leases. Where such a prepayment is made, these prepayment provisions will also apply to 'STS taxpayers' because there is no specific exclusion contained in section 82KZME that excludes them from the operation of section 82KZMF. 123. As noted in the Ruling section above, Growers who prepay Management Fees and Rent are not covered by this Product Ruling, and may instead request a private ruling on the tax consequences of their participation in this Project. | Division 40: 124. Any part of the expenditure of a Grower that is attributable to acquiring an asset or advantage of an enduring kind is generally capital or capital in nature and will not be an allowable deduction under section 8-1. In this Project, expenditure attributable to the establishment of the macadamia trees is of a capital nature. This expenditure falls for consideration under Division 40. 125. The tax treatment of capital expenditure has been dealt with in a representative way in paragraph 21 of this Ruling in the Tables and the accompanying Notes. | Sections 35-10 and 35-55 - deferral of losses from non-commercial business activities and the Commissioner's discretion: 126. In deciding to exercise the discretion in paragraph 35-55(1)(b) on a conditional basis for the income years 30 June 2009 and 30 June 2010 (for First Joint Venturers) and 30 June 2009 to 30 June 2014 (for all other Growers), based on the evidence supplied, the Commissioner has determined that for the income years ended 30 June 2009 up to and including 30 June 2010 and for the income years ended 30 June 2009 up to and including 30 June 2014: 127. 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. 128. The exercise of the Commissioner's discretion under paragraph 35-55(1)(b) for Growers who will stay in the Project until its completion, 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. | Section 82KL - recouped expenditure: 129. The operation of section 82KL of the ITAA 1936 depends, among other things, on the identification of a certain quantum of 'additional benefits(s)'. Insufficient 'additional benefits' will be provided to trigger the application of section 82KL of the ITAA 1936. It will not apply to deny the deduction otherwise allowable under section 8-1 of the ITAA 1997. | Part IVA - general tax avoidance provisions: 130. For Part IVA of the ITAA 1936 to apply there must be a 'scheme' (section 177A), a 'tax benefit' (section 177C) and a dominant purpose of entering into the scheme to obtain a tax benefit (section 177D). 131. The 2007 Macgrove Project (2009 Growers) will be a 'scheme'. A Grower will obtain a 'tax benefit' from entering into the scheme, in the form of tax deductions for the amounts detailed at paragraphs 20 to 23 of this Ruling that would not have been obtained but for the scheme. However, it is not possible to conclude the scheme will be entered into or carried out with the dominant purpose of obtaining this tax benefit. 132. Growers to whom this Ruling applies intend to stay in the scheme for its full term and derive assessable income from the harvesting and sale of the nuts in shell. There are no facts that would suggest that Growers have the opportunity of obtaining a tax advantage other than the tax advantages identified in this Ruling. There is no non-recourse financing or round robin characteristics, and no indication that the parties are not dealing at arm's length or, if any parties are not dealing at arm's length, that any adverse tax consequences result. Further, having regard to the factors to be considered under paragraph 177D(b) of the ITAA 1936 it cannot be concluded, on the information available, that participants will enter into the scheme for the dominant purpose of obtaining a tax benefit. 133. The following is a detailed contents list for this Ruling: Not previously issued as a draft

Ruling: 15. Subject to the stated qualifications, this part of the Product Ruling sets out in detail the taxation obligations and benefits for a Grower in the defined class of entities who enters into the scheme described at paragraphs 27 to 110 of this Ruling. 16. The Grower's participation in the Project must constitute the carrying on of business of primary production. Provided the project is carried out as described below, the Grower's business of primary production will commence at the time of execution of their Management Agreement and Sub Leases by Maccacorp Limited under the Power of Attorney given to Maccacorp Limited by the Grower. | Small business concessions: 17. From the 2007-08 income year, a range of concessions previously available under the Simplified Tax System will be available to an entity if it carries on a business and satisfies the $2 million aggregated turnover test (a 'small business entity'). 18. A small business entity can choose the concessions that best suit its needs. Eligibility for some small business concessions is also dependent on satisfying some additional conditions. Accordingly, unless otherwise stated, application of the small business concessions to Growers who qualify as a 'small business entity' is not able to be dealt with in this Ruling. | Section 6-5: 19. That part of the gross sales proceeds from the Project attributable to the Grower's produce, less any GST payable on those proceeds (section 17-5), will be assessable income of the Grower under section 6-5 in the year in which it is derived. | Sections 8-1 and 25-20 and Division 27 of the ITAA 1997 and sections 82KZME and 82KZMF of the Income Tax Assessment Act 1936: 20. A Grower may claim deductions, on a per Macgrove basis, for the following expenditure set out in the Table below. | Division 40: 21. Each Grower will also be entitled to a tax deduction relating to the decline in value of the macadamia trees planted on the Macgrove, on a per Macgrove basis as set out in the Table below. | Joint Venturers: 22. A Joint Venture Grower may claim deductions, on a per Macgrove basis, for the following expenditure set out in the Tables and Notes in paragraph 20 of this Ruling: 23. Each Joint Venturer can also claim deductions for its 50% proportional share of the Performance Incentive Fee, and 50% proportional share of the horticultural plant write-off as set out in the Table & Notes in paragraph 20 of this Ruling. | Section 35-55 - exercise of Commissioner's discretion: 24. Growers who will stay in the Project until its completion will be considered to be carrying on a business of primary production. Such Growers who are individuals and accepted into the Project in the year ended 30 June 2009 may make losses from the Project that may be affected by the loss deferral rule in section 35-10 in Division 35. 25. The discretion in paragraph 35-55(1)(b) will be exercised for such Growers to who the loss deferral rule would otherwise apply, as follows: Exercise of the discretion in this case however is conditional on the Project being carried out in the manner described in paragraphs 27 to 110 of this Ruling, but will allow Growers referred to who make losses, to offset against their other assessable income in the income years in which those losses arise. | Sections 82KZME, 82KZMF and 82KL and Part IVA: 26. For a Grower who commences participation in the Project and incurs expenditure as required by the Constitution, Management Agreement and Sub Leases the following provisions of the ITAA 1936 have application as indicated: 27. The scheme that is the subject of this Ruling is identified and described in the following documents: Note: certain information has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation. 28. The documents highlighted are those that a Grower may enter into. For the purposes of describing the scheme to which this Ruling applies, there are no other agreements, whether formal or informal, and whether or not legally enforceable, which a Grower, or any associate of a Grower, will be a party to, which are a part of the scheme. The effect of these agreements is summarised below. 29. All Australian Securities and Investment Commission (ASIC) requirements are, or will be, complied with for the term of the agreements. The effect of these agreements is summarised as follows. | Overview: 30. All capitalised terms within this ruling are capitalised terms within the scheme documentation. The main features of the Project are as follows: 31. The Project is a registered managed investment scheme under the Corporations Act 2001 (Corporations Act). Maccacorp Limited (Maccacorp) has been granted an Australian Financial Services Licence (Licence No 296213) and will be the Responsible Entity for the Project. 32. An offer to participate in the Project will be made through a Third Supplementary Product Disclosure Statement (SPDS) which is to be read in conjunction with: 33. PR 2006/163 issued for Early Growers who entered the Project from 20 December 2006 to 15 June 2007. PR 2007/74 issued for Late Growers who entered the Project from 8 August 2007 to 15 June 2008. This ruling deals with offers made under the SPDS and only applies to Growers who enter into the Project from 18 March 2009 to 15 June 2009. 34. The offer under the SPDS is for 68 established Macgroves totalling approximately 27.2 hectares in the Project. Participants will be invited to subscribe for a minimum of one Macgrove, comprising 0.4 hectares. The Trees have been planted on each Grower's Macgrove and all other establishment activities will be completed by the time of acceptance of each Grower's application to participate in the Project. This ruling has no application to Growers accepted to participate in the Project before 18 March 2009 and after 15 June 2009. 35. PR 2006/163 was issued in respect of the original PDS on 20 December 2006 for the Project's Early Growers, based on a Minimum Subscription of 100 established Macgroves. Minimum Subscription was achieved on 7 May 2007. There is no Minimum Subscription for this latest offer. 36. Entities associated with Maccacorp may apply for established Macgroves. However, entities associated with Maccacorp will not take up more than 20 percent of the total number of issued established Macgroves. Each of the entities associated with Maccacorp will be: 37. This Product Ruling will have no application if entities associated with Maccacorp purchase Macgroves and fail to pay the same fees at the same time as other Growers. In this context, payment means that Maccacorp is paid with real money that does not include the use of bridging finance, promissory notes or other such instruments. 38. The Project involves the commercial growing, cultivation and harvesting of Macadamia Nuts for sale. 39. Applications to participate in the Project must be made using the Application and Power of Attorney Form included in the PDS. By completing this Form, the Grower agrees to allow Maccacorp to enter into, execute and otherwise deal with Project Agreements (being the Sub Leases, Management Agreement and Sale Agreement) on their behalf. A custodian will be appointed under the Custody Agreement to hold the Project Assets for the Growers. 40. Maccacorp will allocate established Macgroves to those Applicants accepted as Growers in the Project and establish and maintain a register of Growers throughout the term of the Project. 41. Applicants who are accepted to participate in the Project and who execute the Sub Leases and Management Agreement from the date of this Ruling to on or before 15 June 2009, will become 2009 Growers. 42. The Project Land on which Growers will be growing and cultivating the Trees for the production of Macadamia Nuts is situated at 92 Kenzler Road, Sharon via Bundaberg, Queensland. Maccacorp entered into a Lease with the Land Owner for the Land on 30 September 2006. There are three dams on the land with a total capacity of approx 400 mega litres as well as Water Allocations Nos 360 and 379 for a total of 238 mega litres per annum. The Lease has been registered with the Registrar of Titles, Queensland. 43. Maccacorp will grant the Growers three consecutive Sub Leases to use and occupy one or more identifiable established Macgroves. The collective terms of the Sub Leases (ten years, eight years and one year) correspond to the 19-year term of the Project. Under the first Sub Lease, the Grower agrees to maintain the Orchard in accordance with the Management Plan and in a manner that is consistent with best agricultural practice. The Trees and all Improvements are and remain the property of the Land Owner. 44. Each Grower will enter into a Management Agreement with Maccacorp to cultivate and maintain the Trees and be responsible for harvesting, procuring the processing of and selling the macadamia nuts on behalf of the Grower. 45. Maccacorp has entered into the Sale Agreement with Macadamia Processing Co Limited (MPC) to sell the entire Crop produced from the Orchard during the duration of the Project at prices and on terms that are no less favourable than arms length terms. 46. As an alternative to participation by a Grower as a single entity, the terms of the Constitution and the Management Agreement provide that two Growers may enter into a 'Joint Venture' to subscribe for a Macgrove(s). | Constitution: 47. The Constitution establishes the Project and operates as a deed binding on each Grower and Maccacorp (clause 2.1). The Constitution sets out the terms and conditions under which Maccacorp agrees to act as the Responsible Entity and thereby manage the Project. Upon acceptance into the Project, Growers are bound by the Constitution by virtue of their participation in the Project. 48. The Project is established for the purpose of: 49. The Term of the Project ends upon the earliest of: Upon the termination of the Project, all of the rights and obligations under the Project Agreements will cease and each Project Agreement will be automatically terminated. 50. In order to become a Grower in the Project, an Applicant must lodge an Application and pay to the Responsible Entity the amount of $11,000 in respect of each established Macgrove on the terms and conditions specified in the PDS and SPDS which is current at the date of lodging the relevant Application and the Application must be accepted by the Responsible Entity (clause 3). For this Product Ruling to apply the 'current' PDS under which a Grower is accepted must be materially the same as the PDS dated 8 January 2007, as amended by: 51. The amount payable under clause 3 represents the Management Fee payable for the Initial Orchard Maintenance Services to be provided in the First Financial Year in respect of each established Macgrove, pursuant to the Management Agreement. 52. Each Application for an Interest must: 53. The Responsible Entity may accept Applications where the Application contains all of the material required as detailed in paragraph 52 of this Ruling and the Application Money has been paid (clause 13.2). Upon accepting an Application, the Responsible Entity will allocate to the Applicant that number of established Macgroves in respect of which the Application has been accepted by the Responsible Entity (clause 14.1). 54. The Responsible Entity must establish and maintain a register of Growers throughout the Term of the Project (clause 14.2). 55. If any Application is refused then the Responsible Entity must refund any Application Money to the Applicant concerned within five Business Days after the refusal (clause 13.3). 56. The Responsible Entity must open two Project accounts with a bank or other financial institution. One account will be the Application Fund (into which will be deposited all money received from Applicants) and the other will be the Proceeds Fund (into which will be deposited all money generated from the Project for the Growers of the Project, excluding the Application Money). However, in certain limited circumstances the Responsible Entity may use one account only (clause 12.2). The Responsible Entity may transfer money paid by an Applicant from the Application Fund to the Responsible Entity for the purposes of the Project where the Responsible Entity has issued an Interest to the Applicant (clause 15.1). 57. Each Applicant has an interest in the Application Fund equal to the proportional interest that Applicant's Application Money bears to the total Application Money paid by all Applicants. However, an Applicant does not have any interest in any particular part of the Application Fund or in any Investment (clause 16.1). 58. Each Grower directly owns their Grower Interest, including: 59. The Grower's Interest does not include the Trees or any of the Improvements which will at all times remain the property of the Land Owner (clause 16.3). 60. Each Grower has an interest in the Proceeds Fund equal to the Grower's Proportion, which is defined as the proportion that the area of the Grower's established Macgroves bears to the total area of all established Macgroves registered to Growers in that Financial Year (clause 16.2). 61. Where an event occurs to which any insurance policies apply, the insurance proceeds will be dealt with as follows: 62. The Responsible Entity must harvest all of the Macadamia Nuts grown on Trees in each Grower's Macgrove in accordance with the Management Agreements and may store, market and sell the Crop harvested in accordance with the terms of any Sale Agreement (clause 25.1). Macadamia Nuts grown during the term of the Project will be sold under the Nut in Shell Supply Agreement discussed in paragraphs 96 and 97 of this Ruling. 63. The Responsible Entity must pay into the Proceeds Fund: | Supplementary Constitution: 64. The principal purposes of this document are to firstly, change the name of the Constitution of the 2006 Macgrove Project, to the Constitution of the 2007 Macgrove Project and secondly, to amend the Constitution and Management Agreement to provide for the situation where two entities participate in the Project as Joint Venturers. 65. Joint Venturers are known as First Joint Venturer and Second Joint Venturer, and are apportioned specific responsibilities, rights and entitlements under clause 35 of the Constitution. 66. Each of the First Joint Venturer and the Second Joint Venturer are responsible for the payment of Management Fees, Grower's Expenses, and Rent over the Term of the Project in the manner stated at paragraphs 105 to 108 of this Ruling. Both the First Joint Venturer and the Second Joint Venturer are entitled to a Prescribed Proportion of 50% of the Joint Venture Assets, as defined in clause 1.1. | Second Supplementary Constitution: 67. The principal purposes of this document are to firstly, provide for 2009 Growers to invest in the project, and secondly, to amend the responsibilities, rights and entitlements of 2009 Growers who participate in the project as Joint Venturers. 68. As per the amended constitution, 2009 Grower means a person whose Application is accepted after 1 July 2008 and on or before 15 June 2009. 69. For 2009 Growers who participate in the Project as Joint Venturers, the First Joint Venturer is entitled to a Prescribed Proportion of the Joint Venture Assets of 50% and the Second Joint Venturer is entitled to a Prescribed Proportion of the Joint Venture Assets of 50%. | Compliance Plan: 70. The Plan describes how the Responsible Entity will operate the Project and ensure that it complies with the Corporations Act, the Constitution and with any other operating requirements set down by the board of Directors of the Responsible Entity. 71. The principal purpose of the Compliance Plan is to ensure that the interests of Growers are protected. The Plan sets out the systems and methods by which the Responsible Entity, its officers, agents, contractors and employees will ensure that the Project and the Responsible Entity continue to comply with all relevant parts of the Corporations Act and the Constitution and continuously monitor and review such compliance. | Supplementary Compliance Plan: 72. This Plan changes all references to the 2006 Macgrove Project in the Compliance Plan to the 2007 Macgrove Project. It also amends certain definitions in clause 1 to reflect the changes in the arrangement from the 2006 Macgrove Project. The 2006 Macgrove Project did not proceed because Minimum Subscription was not reached. | Lease: 73. Maccland leases the Land to Maccacorp for the Term of the Project, in return for the 'Rent' (clause 2). The Land is located at 92 Kenzler Road, Sharon via Bundaberg, Queensland, being Lots 3 and 4 on RP866764, Lot 1 on SP 199369, and Lot 60 on CP CK2025. The Term of the Lease is the period commencing on 30 September 2006 and ending 30 June 2028. The Rent is the total of rental received by Maccacorp under all sub lease agreements including, but not limited to the Sub Leases between Maccacorp and the Growers, which shall be due and payable on 1 July in each Financial Year commencing 1 July 2007 (clause 3). 74. The Lessee may give the Lessor a notice asking the Lessor to grant the Lessee a further lease for the period of five years commencing on the day following the expiration of the initial Term of the Lease. This is known as the First Option Period. 75. The Lessee may give the Lessor a notice asking the Lessor to grant the Lessee a further lease for the period of four years commencing on the day following the expiration of the First Option Period. This is known as the Second Option Period. 76. Under the Lease, Maccacorp: 77. Under the Lease, Maccland will provide Access Roads for use by Maccacorp and Maccacorp's employees and will maintain the supply of the Irrigation Water and will renew water allocations and licences as and when required (clauses 9.5 and 9.6). Maccacorp at its own cost keep and maintain with a reputable insurer insurance against public risk and occupiers liability and damage to the Land by fire or other insurable risks (clause 10.1) | Sub Leases: 78. Each Grower will execute three Sub Leases with the Responsible Entity as the Lessor. Under the Sub Leases, the Lessor leases to the Grower the Grower's established Macgrove together with the right to use in common with the Lessor and other participants in the Project the Common Area for the Term from the Commencement Date on and subject to the terms and conditions set out in the Sub Leases (clause 2). Common Area means those parts of the Land provided by the Lessor from time to time for common use by the Grower and the Lessor and/or other Growers who are occupants of the Land and is more particularly described in Item 5 of Schedule 1. 79. Each Sub Lease will be entered at the same time. The commencement and expiry dates of each Sub Lease are as follows: 80. The Grower may give the Lessor a notice asking the Lessor to grant the Lessee a further lease for the period of five years commencing on the day following the expiration of the initial Term of the Third Sub Lease. This is known as the First Option Period. 81. The Grower may give the Lessor a notice asking the Lessor to grant the Lessee a further lease for the period of four years commencing on the day following the expiration of the First Option Period. This is known as the Second Option Period. 82. The Growers must pay to Maccacorp, in respect of each Financial Year during the Term, the Rent in accordance with Item 3 of Schedule 1. There is no Rent payable for the First Financial Year. The Rent for the second and each successive Financial Year of the Term is due and payable on 1 July in each Financial Year, commencing 1 July 2009. 83. Under the Sub Leases the Grower: 84. Unless inconsistent with the Management Plan the Grower will do or will cause to be done, the following: | 2009 Grower Management Agreement: 85. Under clauses 4 and 5 of this Agreement the Grower engages the Manager during the Term of the Project to perform all services necessary to maintain a macadamia nut tree orchard on the Grower's Macgrove, harvest the Macadamia Nuts and sell the Crop on behalf of the Grower (referred to as the 'Orchard Services'). The Term of the Project commences on the Commencement Date (being the date of execution of the Management Agreement) and is expected to end on 30 June 2028. 86. If the Grower exercises the first five year option to extend the term of the Sub Lease, then the Term of this agreement is automatically deemed extended by five years. If the Grower exercises the second four year option to further extend the term of the Sub Lease, then the Term of this agreement is automatically deemed extended by a further four years (clause 3). 87. Specifically clause 5 of the Agreement states that the Manager will: 88. The Initial Orchard Maintenance Services that must be provided by the Manager in the first Financial Year are set out in Schedule 2 to the Management Agreement and the Orchard Maintenance Services that must be provided by the Manager in the second and subsequent Financial Years are set out in Schedule 3 of that Agreement. 89. The Grower must pay the Management Fee to the Manager for the Orchard Services set out in clause 5. The Management Fee for each Financial Year is specified in Column 3 of Item 5 of Schedule 1. 80% of the Management Fee is in respect of performing, or causing to be performed, the Orchard Services and the remaining 20% of the Management Fee is remuneration payable to the Manager as Responsible Entity of the Project for managing that performance. The Management Fee is payable in advance on the date stated in Column 4 of Item 5 of Schedule 1. 90. The Manager will, at the Grower's cost, maintain with a reputable insurer a policy of insurance against public risk and occupier's liability and against damage to the Grower's Macgrove that is caused by fire or other insurable risks provided that in the opinion of the Manager the costs of any such insurance are economically justified. The Manager is not required to take out crop insurance unless specifically agreed between the Manager and the Grower from year to year. All such policies of insurance must be in the names of or note the interests of the Land Owner and the Grower (clause 12). | Pooling of amounts and distribution of the Proceeds Fund: 91. The Constitution (clause 25) sets out provisions relating to the pooling of amounts from the sale of each Grower's Macadamia Nuts and the distribution of the Grower's Proportion of the Proceeds Fund from that sale or from insurance proceeds. This Product Ruling only applies where the following principles apply to those pooling and distribution arrangements: | Principal Subcontractor's Agreement: 92. Maccacorp, the Responsible Entity, appoints the Maccmanagement Pty Limited as Principal Subcontractor, to provide the Services as an independent contractor during the Term. Under this Agreement, Maccmanagement Pty Limited (Maccmanagement) has agreed to provide the Orchard Establishment Services as detailed in Schedule 1, establish the Orchard and provide all necessary services to maintain the Orchard on the Land including the Initial Orchard Maintenance Services and the Orchard Maintenance Services (as defined in the Management Agreement) (clause 3). Maccmanagement will also provide a written report on the Services provided and details of the health and vigour of the Orchard (clause 3.3) 93. The Orchard Establishment Services include the preliminary works, selection of suitable macadamia trees, the planting of the macadamia trees and installation of a modern cost effective irrigation system. 94. The Principal Subcontractor must complete the Orchard Establishment Services in respect of the Macgroves of each Grower by the time of acceptance of each such Grower's application to participate in the Project. 95. This Agreement commences on the Commencement Date, 9 August 2007 (being the date of the Agreement) and ends on the second anniversary of the Commencement Date, 9 August 2009 (Initial Term). By mutual agreement, the Initial Term may be extended by two-year periods or for such other period as may be agreed by the Parties (clause 6). | Nut-In-Shell Supply Agreement: 96. Under this Agreement Maccacorp agrees to sell and Macadamia Processing Co Limited (MPC) agrees to buy, all Macadamia Nut-In-Shell produced on the Project Property from the date of the Agreement (9 December 2005). 97. Each year MPC will pay to Maccacorp the average selling price per kilogram obtained by MPC for the finished product after deducting all reasonable expenses and provisions of MPC. | Custody Agreement: 98. In accordance with clause 4.1 of the Constitution, the Project Property will be held by the Responsible Entity on trust for the Growers from the Term of the Project. The Responsible Entity may appoint an agent or custodian to hold the Project Property separately from any other property (clause 4.2 of the Constitution). Under this Agreement, Maccacorp appoints Perpetual Nominees Limited (Perpetual) as custodian of the Project Assets and Perpetual accepts that appointment. | Fees: 99. The fees payable under clause 14 of the Management Agreement for each Macgrove are set out in Item 5 of Schedule 1, as follows. | Performance Incentive Fee: 100. The Grower must pay a Performance Incentive Fee where applicable (clause 14.6). The Performance Incentive Fee payable in each Financial Year is 25% of any net proceeds of sale of the Crop attributable to a Macgrove that exceeds the Performance Incentive Threshold (as defined in the Management Agreement) in the Financial Year (Item 6 of Schedule 1). The Performance Incentive Fee will only commence from 1 July 2010 as the Trees reach maturity. The Performance Incentive Fees will be deducted from the proceeds of nut-in-shell sales. | Rent: 101. The fee payable under clause 3 of the Sub Leases for each Macgrove is set out in Item 3 of Schedule 1, as follows: | Grower's Expenses: 102. Grower's Expenses includes all stamp duty and registration fees in respect of the Management Agreement plus the Grower's portion of all premiums for insurance taken out by the Manager in accordance with clause 12 of the Management Agreement. 103. The Manager will maintain, with a reputable insurer, a policy of insurance against public risk and occupier's liability and against damage to the Grower's Macgrove that is caused by fire or other insurable risks provided that in the opinion of the Manager the costs of any such insurance are economically justified (clause 12.1 of the Management Agreement). 104. Grower's Expenses are payable within 30 days of written notification by the Responsible Entity to the Grower of the amount of the Grower's Expenses (clause 14.5 of the Management Agreement). | Joint Venture: 105. Fees payable per Macgrove by a Grower who is in a Joint Venture are as stipulated in the new paragraph 35.5(c) of the Second Supplementary Constitution. Under this clause, the amounts of fees for which a Joint Venture Grower will be solely responsible are expressed as percentages of the fees outlined in paragraphs 99 to 104 of this Ruling. 106. The First Joint Venturer will be solely responsible for paying the following fees and other amounts: 107. The Second Joint Venturer will be solely responsible for paying the following fees and other amounts: 108. Each Joint Venturer is liable for paying their Prescribed Proportion (being defined in the Supplementary Constitution as 50% each) of any Performance Incentive Fees and each will be entitled to the Prescribed Proportion of the Joint Venturer's Macadamia Nuts Crop and the Joint Venture Proceeds (clause 35.6 of the Second Supplementary Constitution). | Finance: 109. There is no financing facility offered by the Manager or any other party to the arrangement. Growers can fund their investment in the Project themselves or borrow from an independent lender. Growers cannot rely on any part of this Ruling if the Application Fee is not paid in full on or before 15 June 2009. Where the Application fee is being financed through a lending institution written evidence of approval must be provided to the Responsible Entity by the lending institution on or before 15 June 2009. The lending institution must provide the full amount of the loan monies to Responsible Entity no later than 30 June 2009. 110. This Ruling does not apply if the finance arrangement entered into by the Grower includes or has any of the following features: Commissioner of Taxation 18 March 2009 | Is the Grower carrying on a business?: 111. For the amounts set out in paragraphs 20 to 23 of this Ruling to constitute allowable deductions the Grower's macadamia horticultural activities as a participant in the 2007 Macgrove Project (2009 Growers) must amount to the carrying on of a business of primary production. 112. The general indicators used by the Courts in determining whether an entity is carrying on a business are set out in Taxation Ruling TR 97/11 Income tax: am I carrying on a business? 113. More recently, and in relation to a managed investment scheme similar to that which is the subject of this Ruling, the Full Federal Court in Hance v. FC of T ; Hannebery v. FC of T [2008] FCAFC 196; 2008 ATC 20-085 applied these principles to conclude that 'Growers' in that scheme were carrying on a business of producing almonds (at FCAFC 90; ATC 90). 114. Application of these principles to the arrangement set out above leads to the conclusion that Growers (as described in paragraphs 2 to 4 in this Ruling), who will stay in the Project until its completion, will be carrying on a business of primary production involving growing and harvesting Macadamia Nuts for sale. | Section 8-1: 115. The Management Fees, Rent, Grower's Expenses and Performance Incentive Fees are deductible under section 8-1. A 'non-income producing' purpose is not identifiable in the arrangement and there is no capital component evident in the Management Fees, Rent, Grower's Expenses and Performance Incentive Fees. 116. The tests of deductibility under the first limb of section 8-1 are met. The exclusions do not apply. If the prepayment provisions do not apply (see paragraphs 119 to 123 of this Ruling) a deduction for these amounts can be claimed in the year in which they are incurred. (Note: the meaning of incurred is explained in Taxation Ruling TR 97/7.) 117. The deductibility of interest incurred by Growers who finance their participation in the Project through a loan facility with a bank or other financier is outside the scope of this Ruling. A Grower may request a private ruling on the deductibility or otherwise of interest incurred under finance arrangements that are not covered by this Product Ruling. | Section 25-20: 118. Applying the same principles as that used for the Management Fees, Rent, Grower's Expenses and Performance Incentive Fees, a fee for registering and stamping the Sub Leases is a lease document expense incurred for acquiring a sub lease over a property that is used or is to be used during the Term of the Project solely for income producing purposes, has sufficient connection with the gaining of assessable income to be deductible under section 25-20. | Sections 82KZL to 82KZMF: 119. The prepayment provisions contained in Subdivision H of Division 3 of Part III of the ITAA 1936 affect the timing of deductions for certain prepaid expenditure. These provisions apply to certain expenditure incurred under an agreement in return for the doing of a thing under the agreement (for example, the performance of management services or the leasing of land) that will not be wholly done within the same year of income as the year in which the expenditure is incurred. If expenditure is incurred to cover the provision of services to be provided within the same year, then it is not expenditure to which the prepayment rules apply. 120. For this Project, the only prepayment provisions that are relevant are section 82KZL of the ITAA 1936 (an interpretive provision) and sections 82KZME and 82KZMF of the ITAA 1936 (operative provisions). | Application of the prepayment provisions to this Project: 121. Under the scheme to which this Product Ruling applies Management Fees and Rent are incurred annually. Accordingly, the prepayment provisions in sections 82KZME and 82KZMF of the ITAA 1936 have no application to this scheme. 122. However, sections 82KZME and 82KZMF of the ITAA 1936 may have relevance if a Grower in this Project prepays all or some of the expenditure payable under the Management Agreement and/or the Sub Leases. Where such a prepayment is made, these prepayment provisions will also apply to 'STS taxpayers' because there is no specific exclusion contained in section 82KZME that excludes them from the operation of section 82KZMF. 123. As noted in the Ruling section above, Growers who prepay Management Fees and Rent are not covered by this Product Ruling, and may instead request a private ruling on the tax consequences of their participation in this Project. | Division 40: 124. Any part of the expenditure of a Grower that is attributable to acquiring an asset or advantage of an enduring kind is generally capital or capital in nature and will not be an allowable deduction under section 8-1. In this Project, expenditure attributable to the establishment of the macadamia trees is of a capital nature. This expenditure falls for consideration under Division 40. 125. The tax treatment of capital expenditure has been dealt with in a representative way in paragraph 21 of this Ruling in the Tables and the accompanying Notes. | Sections 35-10 and 35-55 - deferral of losses from non-commercial business activities and the Commissioner's discretion: 126. In deciding to exercise the discretion in paragraph 35-55(1)(b) on a conditional basis for the income years 30 June 2009 and 30 June 2010 (for First Joint Venturers) and 30 June 2009 to 30 June 2014 (for all other Growers), based on the evidence supplied, the Commissioner has determined that for the income years ended 30 June 2009 up to and including 30 June 2010 and for the income years ended 30 June 2009 up to and including 30 June 2014: 127. 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. 128. The exercise of the Commissioner's discretion under paragraph 35-55(1)(b) for Growers who will stay in the Project until its completion, 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. | Section 82KL - recouped expenditure: 129. The operation of section 82KL of the ITAA 1936 depends, among other things, on the identification of a certain quantum of 'additional benefits(s)'. Insufficient 'additional benefits' will be provided to trigger the application of section 82KL of the ITAA 1936. It will not apply to deny the deduction otherwise allowable under section 8-1 of the ITAA 1997. | Part IVA - general tax avoidance provisions: 130. For Part IVA of the ITAA 1936 to apply there must be a 'scheme' (section 177A), a 'tax benefit' (section 177C) and a dominant purpose of entering into the scheme to obtain a tax benefit (section 177D). 131. The 2007 Macgrove Project (2009 Growers) will be a 'scheme'. A Grower will obtain a 'tax benefit' from entering into the scheme, in the form of tax deductions for the amounts detailed at paragraphs 20 to 23 of this Ruling that would not have been obtained but for the scheme. However, it is not possible to conclude the scheme will be entered into or carried out with the dominant purpose of obtaining this tax benefit. 132. Growers to whom this Ruling applies intend to stay in the scheme for its full term and derive assessable income from the harvesting and sale of the nuts in shell. There are no facts that would suggest that Growers have the opportunity of obtaining a tax advantage other than the tax advantages identified in this Ruling. There is no non-recourse financing or round robin characteristics, and no indication that the parties are not dealing at arm's length or, if any parties are not dealing at arm's length, that any adverse tax consequences result. Further, having regard to the factors to be considered under paragraph 177D(b) of the ITAA 1936 it cannot be concluded, on the information available, that participants will enter into the scheme for the dominant purpose of obtaining a tax benefit. 133. The following is a detailed contents list for this Ruling: Not previously issued as a draft


Appendix: Is the Grower carrying on a business?: 111. For the amounts set out in paragraphs 20 to 23 of this Ruling to constitute allowable deductions the Grower's macadamia horticultural activities as a participant in the 2007 Macgrove Project (2009 Growers) must amount to the carrying on of a business of primary production. 112. The general indicators used by the Courts in determining whether an entity is carrying on a business are set out in Taxation Ruling TR 97/11 Income tax: am I carrying on a business? 113. More recently, and in relation to a managed investment scheme similar to that which is the subject of this Ruling, the Full Federal Court in Hance v. FC of T ; Hannebery v. FC of T [2008] FCAFC 196; 2008 ATC 20-085 applied these principles to conclude that 'Growers' in that scheme were carrying on a business of producing almonds (at FCAFC 90; ATC 90). 114. Application of these principles to the arrangement set out above leads to the conclusion that Growers (as described in paragraphs 2 to 4 in this Ruling), who will stay in the Project until its completion, will be carrying on a business of primary production involving growing and harvesting Macadamia Nuts for sale. | Section 8-1: 115. The Management Fees, Rent, Grower's Expenses and Performance Incentive Fees are deductible under section 8-1. A 'non-income producing' purpose is not identifiable in the arrangement and there is no capital component evident in the Management Fees, Rent, Grower's Expenses and Performance Incentive Fees. 116. The tests of deductibility under the first limb of section 8-1 are met. The exclusions do not apply. If the prepayment provisions do not apply (see paragraphs 119 to 123 of this Ruling) a deduction for these amounts can be claimed in the year in which they are incurred. (Note: the meaning of incurred is explained in Taxation Ruling TR 97/7.) 117. The deductibility of interest incurred by Growers who finance their participation in the Project through a loan facility with a bank or other financier is outside the scope of this Ruling. A Grower may request a private ruling on the deductibility or otherwise of interest incurred under finance arrangements that are not covered by this Product Ruling. | Section 25-20: 118. Applying the same principles as that used for the Management Fees, Rent, Grower's Expenses and Performance Incentive Fees, a fee for registering and stamping the Sub Leases is a lease document expense incurred for acquiring a sub lease over a property that is used or is to be used during the Term of the Project solely for income producing purposes, has sufficient connection with the gaining of assessable income to be deductible under section 25-20. | Sections 82KZL to 82KZMF: 119. The prepayment provisions contained in Subdivision H of Division 3 of Part III of the ITAA 1936 affect the timing of deductions for certain prepaid expenditure. These provisions apply to certain expenditure incurred under an agreement in return for the doing of a thing under the agreement (for example, the performance of management services or the leasing of land) that will not be wholly done within the same year of income as the year in which the expenditure is incurred. If expenditure is incurred to cover the provision of services to be provided within the same year, then it is not expenditure to which the prepayment rules apply. 120. For this Project, the only prepayment provisions that are relevant are section 82KZL of the ITAA 1936 (an interpretive provision) and sections 82KZME and 82KZMF of the ITAA 1936 (operative provisions). | Application of the prepayment provisions to this Project: 121. Under the scheme to which this Product Ruling applies Management Fees and Rent are incurred annually. Accordingly, the prepayment provisions in sections 82KZME and 82KZMF of the ITAA 1936 have no application to this scheme. 122. However, sections 82KZME and 82KZMF of the ITAA 1936 may have relevance if a Grower in this Project prepays all or some of the expenditure payable under the Management Agreement and/or the Sub Leases. Where such a prepayment is made, these prepayment provisions will also apply to 'STS taxpayers' because there is no specific exclusion contained in section 82KZME that excludes them from the operation of section 82KZMF. 123. As noted in the Ruling section above, Growers who prepay Management Fees and Rent are not covered by this Product Ruling, and may instead request a private ruling on the tax consequences of their participation in this Project. | Division 40: 124. Any part of the expenditure of a Grower that is attributable to acquiring an asset or advantage of an enduring kind is generally capital or capital in nature and will not be an allowable deduction under section 8-1. In this Project, expenditure attributable to the establishment of the macadamia trees is of a capital nature. This expenditure falls for consideration under Division 40. 125. The tax treatment of capital expenditure has been dealt with in a representative way in paragraph 21 of this Ruling in the Tables and the accompanying Notes. | Sections 35-10 and 35-55 - deferral of losses from non-commercial business activities and the Commissioner's discretion: 126. In deciding to exercise the discretion in paragraph 35-55(1)(b) on a conditional basis for the income years 30 June 2009 and 30 June 2010 (for First Joint Venturers) and 30 June 2009 to 30 June 2014 (for all other Growers), based on the evidence supplied, the Commissioner has determined that for the income years ended 30 June 2009 up to and including 30 June 2010 and for the income years ended 30 June 2009 up to and including 30 June 2014: 127. 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. 128. The exercise of the Commissioner's discretion under paragraph 35-55(1)(b) for Growers who will stay in the Project until its completion, 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. | Section 82KL - recouped expenditure: 129. The operation of section 82KL of the ITAA 1936 depends, among other things, on the identification of a certain quantum of 'additional benefits(s)'. Insufficient 'additional benefits' will be provided to trigger the application of section 82KL of the ITAA 1936. It will not apply to deny the deduction otherwise allowable under section 8-1 of the ITAA 1997. | Part IVA - general tax avoidance provisions: 130. For Part IVA of the ITAA 1936 to apply there must be a 'scheme' (section 177A), a 'tax benefit' (section 177C) and a dominant purpose of entering into the scheme to obtain a tax benefit (section 177D). 131. The 2007 Macgrove Project (2009 Growers) will be a 'scheme'. A Grower will obtain a 'tax benefit' from entering into the scheme, in the form of tax deductions for the amounts detailed at paragraphs 20 to 23 of this Ruling that would not have been obtained but for the scheme. However, it is not possible to conclude the scheme will be entered into or carried out with the dominant purpose of obtaining this tax benefit. 132. Growers to whom this Ruling applies intend to stay in the scheme for its full term and derive assessable income from the harvesting and sale of the nuts in shell. There are no facts that would suggest that Growers have the opportunity of obtaining a tax advantage other than the tax advantages identified in this Ruling. There is no non-recourse financing or round robin characteristics, and no indication that the parties are not dealing at arm's length or, if any parties are not dealing at arm's length, that any adverse tax consequences result. Further, having regard to the factors to be considered under paragraph 177D(b) of the ITAA 1936 it cannot be concluded, on the information available, that participants will enter into the scheme for the dominant purpose of obtaining a tax benefit.


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. | Potential participants must form their own view about the commercial and financial viability of the product. The Commissioner recommends 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. | $11,000 See Notes (i), (ii) & (iii) | $2,200 See Notes (i), (ii) & (iii) | Must be calculated See Notes (i), (ii) & (iii) | $792 See Notes (i), (ii) & (iii) | Must be calculated See Notes (i) & (iv) | Must be calculated See Notes (i) & (v) | As incurred See Notes (i) & (vi) | Establishment of macadamia trees | Type of business to be carried on by each participant | Number of hectares offered for cultivation | Number of trees per Macgrove | Initial cost (referred to as 'Application Fee') | Annual Management Fees and Annual Rent | Orchard Operating Expenses, Grower's Expenses, Annual Insurance premiums and Performance Incentive Fees | Date of execution of first Sub Lease (being the date of acceptance of Grower into Project) | 10 years after the commencement date of the first Sub Lease | 10 years and one day after the commencement of the first Sub Lease | 8 years after the commencement date of the second Sub Lease | 19 years and one day after the commencement of the first Sub Lease | Financial year of Project | As for Financial Year 4 Indexed by the percentage increase (if any) in the CPI during the 12 months preceding the date on which indexation is to occur | As for Financial Year 5 Indexed as above | As for Financial Year 6 Indexed as above | As for Financial Year 7 Indexed as above | Instalment 1 (the Management Fee Indexed from the previous Financial Year); plus Instalment 2 (the amount, if any, by which the Grower's Proportion of the Orchard Operating Expenses [1] incurred in a Financial Year exceeds the amount of Instalment 1 for that Financial Year) | Instalment 1: 1 July in each Financial Year; Instalment 2: within 7 days of receipt of the Orchard Operating Expenses Statement | The amount of Rent payable in the previous financial year Indexed by the percentage increase (if any) in the CPI during the 12 months preceding the date on which indexation is to occur | The amount of Rent payable in the last Financial Year of the first Sub Lease Indexed as above | 1 July of the first Financial Year of this second Sub Lease | The amount of Rent payable for the previous Financial Year Indexed as above | The amount of Rent payable in the last Financial Year of the second Sub Lease Indexed as above | 1 July of the Financial Year in which this third Sub Lease commences | Deductions for Management Fees, Rent, Grower's Expenses, Performance Incentive Fee and Lease Document Fee | Sections 8-1 and 25-20 and Division 27 of the ITAA 1997 and sections 82KZME to 82KZMF of the Income Tax Assessment Act 1936 | Deductions for capital expenditure | Division 35 - deferral of losses from non-commercial business activities | Prepayment provisions and anti-avoidance provisions | Deductibility of Management Fees, Rent, Performance Incentive Fee and Grower's Expenses | Sections 82KZL to 82KZMF of the ITAA 1936 | Expenditure of a capital nature | Appendix 2 - Detailed contents list


Related rulings: TR 97/7 TR 97/11 TR 98/22 PR 2006/163 PR 2006/163A PR 2007/74
Legislative references: ITAA 1936 82KL ITAA 1936 Pt III Div 3 Subdiv H ITAA 1936 82KZL ITAA 1936 82KZLA ITAA 1936 82KZM ITAA 1936 82KZMA ITAA 1936 82KZMB ITAA 1936 82KZMC ITAA 1936 82KZMD ITAA 1936 82KZME ITAA 1936 82KZMF ITAA 1936 Pt IVA ITAA 1936 177A ITAA 1936 177C ITAA 1936 177D ITAA 1936 177D(b) ITAA 1997 6-5 ITAA 1997 8-1 ITAA 1997 17-5 ITAA 1997 25-20 ITAA 1997 Div 27 ITAA 1997 Div 35 ITAA 1997 35-10 ITAA 1997 35-10(2) ITAA 1997 35-55 ITAA 1997 35-55(1)(b) ITAA 1997 Div 40 ITAA 1997 40-515(1)(b) ITAA 1997 40-520(2) ITAA 1997 40-525(2) ITAA 1997 40-530 ITAA 1997 40-545 TAA 1953 Copyright Act 1968 Corporations Act 2001 SISA 1993
Case references: Hance v. FC of T; Hannebery v. FC of T [2008] FCAFC 196 2008 ATC 20-085
Subject references: carrying on a business fee expenses management fees non-commercial losses producing assessable income product rulings public rulings