Product Ruling

PR 2000/58

Income tax: Tarwoona Olives Scheme No 1

This version is no longer current. Please follow this link to view the current version.

• Please note that the PDF version is the authorised version of this ruling.
  This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

FOI status:

may be releasedFOI number: I 102771

Preamble

No guarantee of commercial success

The Australian Taxation Office (ATO) does not sanction or guarantee these products as investments. Further, we give no assurance that the products are commercially viable, that charges are reasonable, appropriate or represent industry norms, or that projected returns will be achieved or are reasonably based.

Potential investors must form their own view about the commercial and financial viability of the products. This will involve a consideration of important issues such as whether projected returns are realistic, the 'track record' of the management, the level of fees in comparison to similar products, how the investment fits an existing portfolio, etc. We recommend a financial (or other) adviser be consulted for such information.

This Product Ruling provides certainty for potential investors by confirming that the tax benefits set out below in the Ruling part of this document are available, provided that the arrangement is carried out in accordance with the information we have been given, and have described below in the Arrangement part of this document.

If the arrangements are not carried out as described below, investors lose the protection of this Product Ruling. Potential investors may wish to seek assurances from the promoter that the arrangements will be carried out as described in this Product Ruling.

Potential investors should be aware that the ATO will be undertaking review activities in future years to confirm the arrangements have been implemented as described below and to ensure that participants in the arrangements include in their income tax returns income derived in those future years.

Terms of use of this Product Ruling

This Product Ruling has been given on the basis that the person(s) who applied for the Ruling, and their associates, will abide by strict terms of use. Any failure to comply with the terms of use may lead to the withdrawal of this Ruling.

What this Product Ruling is about

1. This Ruling sets out the Commissioner's opinion on the way in which the 'tax laws' identified below apply to the defined class of persons who take part in the arrangement to which this Ruling relates. In this Ruling this arrangement is sometimes referred to as the Tarwoona Olives Scheme No 1, or just simply as 'the Project', or the 'Product'.

Tax law(s)

2. The tax law(s) dealt with in this Ruling are:

•

section 8-1 of the Income Tax Assessment Act 1997 ('ITAA 1997');

•

section 25-25 of the ITAA 1997

•

section 27-5 of the ITAA 1997;

•

section 27-30 of the ITAA 1997;

•

section 387-55 of the ITAA 1997;

•

section 387-125 of the ITAA 1997;

•

section 387-165 of the ITAA 1997;

•

section 388-55 of the ITAA 1997;

•

section 82KL of the Income Tax Assessment Act 1936 ('ITAA 1936');

•

section 82KZM of the ITAA 1936;

•

sections 82KZMB - 82KZMD of the ITAA 1936; and

•

Part IVA of the ITAA 1936.

3. On 11 November 1999, the Government announced further changes to the tax system as part of The New Business Tax System. A number of those changes, especially those to do with 'tax shelters', could affect the tax laws dealt with in this Ruling. Some of the changes apply from the date of announcement and others are proposed to apply from nominated dates in the future.

4. Although this Ruling mentions certain of those announced changes, the information given on the treatment of expenditure which may be affected by them is not binding on the Commissioner. Legally binding advice in respect of those changes cannot be given until the relevant laws(s) are enacted.

5. However, if the changes become law the operation of that law will take precedence over the application of this Ruling, and to that extent, this Ruling will be superseded. If requested, when the relevant law(s) are enacted, the Commissioner will formalise the non-binding information shown in this Ruling by issuing a new Product Ruling that describes the operation of those law(s).

Class of persons

6. The class of persons to whom this Ruling applies is those who enter into the arrangement described below on or after the date this Ruling is made. They will have a purpose of staying in the arrangement until it is completed (i.e., being a party to the relevant agreements until their term expires) and deriving assessable income from this involvement as set out in the description of the arrangement. In this Ruling these persons are referred to as 'Farmers'.

7. The class of persons to whom this Ruling applies does not include persons who intend to terminate their involvement in the arrangement prior to its completion, or who otherwise do not intend to derive assessable income from it.

Qualifications

8. The Commissioner rules on the precise arrangement identified in the Ruling.

9. The class of persons defined in the Ruling may rely on its contents, provided the arrangement (described below at paragraphs 15 to 51 ) is carried out in accordance with details described in the Ruling. If the arrangement described in the Ruling is materially different from the arrangement that is actually carried out:

•

the Ruling has no binding effect on the Commissioner, as the arrangement entered into is not the arrangement ruled upon; and

•

the Ruling will be withdrawn or modified.

10. A Product Ruling may only be reproduced in its entirety. Extracts may not be reproduced. As each Product Ruling is copyright, apart from any use as permitted under the Copyright Act 1968, no Product Ruling may be reproduced by any process without prior written permission from the Commonwealth. Requests and inquiries concerning reproduction and rights should be addressed to the Manager, Legislative Services, AusInfo, GPO Box 1920, Canberra ACT 2601.

Date of effect

11. This Ruling applies prospectively from 17 May 2000, the date this Ruling is made. However, the Ruling does not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Ruling (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

12. If a taxpayer has a more favourable private ruling (which is legally binding), the taxpayer can rely on the private ruling if the income year to which the private ruling relates has ended, or has commenced but not yet ended. However, if the arrangement covered by the private ruling has not begun to be carried out, and the income year to which it relates has not yet commenced, this Ruling applies to the taxpayer to the extent of the inconsistency only (see Taxation Determination TD 93/34).

Withdrawal

13. This Product Ruling is withdrawn and ceases to have effect after 30 June 2002. The Ruling continues to apply, in respect of the tax law(s) ruled upon, to all persons within the specified class who enter into the specified arrangement during the term of the Ruling. Thus, the Ruling continues to apply to those persons, even following its withdrawal, who entered into the specified arrangement prior to withdrawal of the Ruling. This is subject to there being no change in the arrangement or in the persons' involvement in the arrangement.

Previous Rulings

14. This Ruling replaces Product Ruling PR 1999/21, which is withdrawn on and from the date this Ruling is made. Subject to changes in the law relating to certain prepayments, Product Ruling 1999/21 will continue to apply to investors who entered into the Project on or before 17 May 2000.

Arrangement

15. The arrangement that is the subject of this Ruling is described below. This description is based on the following documents. These documents, or relevant parts of them, as the case may be, form part of and are to be read with this description. The relevant documents or parts of documents incorporated into this description of the arrangement are:

•

Draft Prospectus prepared for Tarwoona Olives Scheme No 1;

•

Draft copy of the Tarwoona Olives Scheme No 1 Constitution between North West Rural Services Co Limited ('NWRS'), Tarwoona Olives Co Limited ('TOC') and the Farmer, which also incorporates a Joint Venture Agreement between NWRS, TOC and each Farmer in the Joint Venture;

•

Draft copy of Application for shares in TOC;

•

Draft copy of Application for Finance, Principal and Interest Loan;

•

draft Custodian Agreement between Australian Rural Group Limited ('ARG') and NWRS, to appoint ARG as the Custodian of the Managed Investment Scheme;

•

draft copy of Loan Deed between Intagpro Pty Limited and the Borrower;

•

correspondence from NWRS's tax professional adviser to the Australian Taxation Office ('ATO') dated 3 February, 16 March, 17 March and 13 April 1999; and

•

Facsimile transmission from Lear & Co to the ATO dated 19 April 2000.

Note: certain information received from North West Rural Services Co Limited has been provided on a commercial-in-confidence basis and will not be disclosed or released under Freedom of Information legislation.

16. The effect of these agreements is summarised as follows: this arrangement is called the Tarwoona Olives Scheme No 1 and is registered as a Managed Investment Scheme under the Corporations Law. By entering into the Joint Venture Agreement, a Farmer will conduct, in joint venture with others, the business of growing olive trees with the objective of producing olives or olive products over a period of 25 years from the commencement date for commercial sale. A Farmer will commence business by entering into a Joint Venture Agreement with NWRS ('the Manager'), TOC ('the Landowner') and other Farmers whereby NWRS will be engaged to manage the Joint Venture and the Farmers' interest in it for 25 years.

17. The Joint Venture Farmers will grow the olive trees on the property known as 'Quinella' situated 53km from Gunnedah, New South Wales. The relevant property will be leased to the Joint Venture Farmers by TOC, as landowner, via ARG. The property is approximately 493ha in size and 400ha will be used for the Project and additional land is available if necessary. Up to 2,000 interests in the Joint Venture are on offer. The minimum investment per Farmer will be one participation or interest in the Joint Venture. There is no maximum investment per Farmer in the Joint Venture.

18. Each Joint Venture Farmer in the Project is required to subscribe for an equity stake in TOC, the Landowner, or to nominate another person or entity to do so. The required equity stake being the minimum equity interest in TOC comprises ten (10) ordinary shares with a total cost of $1,800. Additional equity of a multiple of ten (10) ordinary shares must be taken to equate to the number of participation interests in the Project.

19. The relevant property will be owned by TOC, which company will be owned as to sixty percent (60%) by Joint Venture Farmers or their nominated entities / persons in the same proportion as their Joint Venture participation.

20. Australian Rural Group Limited will act as Custodian of the Project for the Joint Venture Farmers.

21. Possible projected returns for Joint Venture Farmers are set out in the Draft Prospectus. However, these are dependent upon a range of assumptions and NWRS does not give any assurance or guarantee whatsoever in respect of the future success of, or financial returns associated with, entering into the Joint Venture. Olive production is projected to commence in the year ending 30 June 2004. A harvest yield of 5,000 kilograms per hectare of olives in the fifth year of the Project increasing to 25,000 kilograms per hectare in year 11 onwards is anticipated. The Project is forecast to return (before allowing for any tax benefits) in excess of 20% averaged over the first 25 years.

22. All of the harvested olives will be sold to the highest bidder in the market.

Constitution and Joint Venture Agreement

23. In respect of the Project, a Farmer has an interest in specific property comprising the Managed Investment Scheme ('Scheme') property which is defined in the Constitution. ARG will act as Custodian of the Project for the Joint Venture Farmers. Farmers execute a power of attorney enabling NWRS to act on their behalf as required.

24. Farmers do not have any right to withdraw from the Scheme nor do they have a right to require their interest in the Scheme to be bought by the Manager or any other person or to have their interest in the Scheme redeemed (Clause 11, Constitution). A Farmer's Scheme interest may be transferred, provided such transfer is a transfer of the entire unencumbered interest in the Scheme (Clause 16, Constitution). NWRS keeps a register of Farmers.

25. The Farmers intend to remain Scheme members until the Scheme is determined on 30 June 2024, unless it is wound up earlier (Clause 7, Constitution).

26. The Farmers will each enter into a Joint Venture Agreement to carry out the Project as a Joint Venture and to appoint NWRS to manage the Joint Venture. The Project as defined in the Joint Venture Agreement is essentially the business of planting, growing and cultivating olive trees to produce olives and olive products and the harvesting, marketing and sale of the olives and olive products produced therefrom.

27. TOC, being the Landowner, will grant to ARG, the Custodian, as agent for the Manager, a lease of the relevant land. The Manager will hold the interest in the land, being the lease, on behalf of the Joint Venture of Farmers to enable the plantation to be planted out with olive trees.

Fees

28. The fees and contributions payable are as detailed below:

Management fees

29. A management fee of $6,610 will be payable for each interest in the Joint Venture in respect of the first year of the Project. This fee which will be payable on settlement of the application in respect of the Joint Venture Farmer. The fee is payable in advance for services to be provided by the Manager for the period of twelve (12) months from the date of payment.

30. Management fees in years subsequent to the first year will be payable on the anniversary of the settlement date yearly in advance on the basis of $1,618 for the 2nd year and then that amount increased by the Consumer Price Index (All Groups) Sydney in each subsequent year, until there are sufficient funds from income of the Joint Venture to enable management fees to be payable yearly in advance from those funds.

31. In addition to the annual management fee, the Manager shall be entitled to be paid harvest expenses as set out in the Joint Venture Agreement comprising an amount equal to the greater of:

•

20% of the gross sale proceeds; or

•

$0.27 per kilogram of olives harvested, commencing in the year of harvest and indexed annually by the CPI (All Groups) Sydney.

32. Out of this payment, the Manager will attend to payment of harvest expenses. Where such payment is insufficient to meet the harvest expenses, the harvest expenses shall be borne by the Farmers.

Lease rent contribution fees

33. The property necessary for the Project, and necessary fencing and machinery sheds and other structural improvements excluding irrigation equipment, will be leased to the Farmers in years 1 and 2 for $200 per interest in the Joint Venture, and in years 3 onwards for the previous year's lease rent contributions fee increased by the CPI (All Groups) Sydney per interest.

Joint Venture contributions

34. Each Joint Venture Farmer will be required to pay to the Manager the following upon settlement date of the Farmer's interest in the Joint Venture:

•

an irrigation fee of $2,050 per participation;

•

an erosion control fee of $180 per participation;

•

an olive grove establishment fee of $780 per participation; and

•

a land clearing fee of $95 per participation.

35. In addition, a further olive grove establishment fee of $275 is due per participation at the commencement of the second year.

36. These fees must be applied by the Manager to undertake the necessary capital works for the benefit of the Joint Venture.

37. Each Joint Venture Farmer (or interests nominated by the Joint Venture Farmer) will be required to purchase shares in Tarwoona Olives Co Limited. A participation will require the payment of $1,800 of capital to acquire 10 shares in the company, which payment will be required to be made on settlement date.

38. In the event that the gross income of the Joint Venture is insufficient in any year to meet payment of the relevant management fees and lease rent contribution fees, the shortfall will be met by the Joint Venture Farmers and not from gross income of future years.

39. NWRS considers the fees and contributions payable above are reasonable and commercial.

Manager's services

40. The services to be provided by NWRS to the Joint Venture are specifically set out in the Joint Venture Agreement and they include:

•

caring and maintaining the olive tree seedlings in the nursery during the first 12 month period;

•

cultivating, fertilising and planting out the plantation with the required number of olive trees in a healthy condition per hectare;

•

irrigating and applying water to the plantation to maintain the olive trees on the plantation in a healthy condition;

•

pruning the olive trees as required from time to time in order to promote the growth and production of olives in accordance with the good agricultural practice for growing olives;

•

taking such reasonable measures as may be required to control the growth of weeds and other vegetable pests on the plantation upon which the olive trees are growing, including the cultivation of the plantation between the rows of olive trees;

•

taking all reasonable measures in accordance with the principles of good husbandry and to the extent reasonably possible to deter and eradicate any insect, bird or animal pests from the plantation which may detract from the health and vigour of the olive trees or the yield of olive fruit therefrom;

•

replacing at the expense of the Joint Venture any olive trees that die or become unproductive;

•

applying manure, fertiliser, mulch and such other material as is necessary in accordance with good agricultural practice to encourage growth and fruiting of the olive trees;

•

repairing and maintaining in a good condition all fences, stakes, accessways and other structural improvements and irrigation plant and equipment on the plantation;

•

marketing and arranging sales of the olives produced from the plantation including entering into a contract or contracts to supply olives harvested from the plantation;

•

effecting the necessary insurances;

•

employing such staff and labour as are necessary for the aforesaid purposes;

•

performing any of the duties of the Manager as required under the Joint Venture Agreement and the Scheme Constitution; and

•

doing all other things that are necessary or incidental to carrying out the Project to produce a viable business of growing, marketing and sale of olives or olive produce.

41. The land clearing fee is payable by each Farmer to the Manager for the clearing of the plantation so that it is suitable for the planting out of olive trees.

42. The olive grove establishment fee is payable by each Farmer to the Manager for the purchase of the olive tree seedlings to establish the plantation, the cost of caring for the seedlings in the nursery and the planting out of the seedlings in the ground to be undertaken in the first and second years of the Project.

43. The irrigation fee is payable by each Farmer to the Manager for irrigation works to provide water reticulation to the olive trees on the plantation.

44. The erosion control fee is payable by each Farmer to the Manager for the provision of erosion control measures to the land.

45. The Manager, NWRS, will subcontract all proposed services and work to Intagpro Pty Limited, its holding company.

Planting

46. Olive seedlings will be purchased from various nurseries for the Project as and when required. It is proposed that the necessary number of young seedlings will be acquired by the Joint Venture from the nurseries and transferred to a special purpose built nursery of the Manager to be operated on the property. This nursery will be important to ensure the quickest possible growth under best practice agricultural management of the young seedlings. It is intended that the seedlings will, as they grow in the first year in this environment, be transferred to larger containers to ensure that they are strong and ready to be planted in the Joint Venture leased land in the second year of the Project.

47. The ground to take the seedlings in the second year will have been cleared and erosion controls implemented. Fertilisation and irrigation will have occurred throughout the first year to ensure the best possible soil structure to receive the strongest possible advanced seedlings. The land works will occur in the first year of the Project.

Finance

48. Farmers can finance their participation in the Joint Venture Project themselves, borrow from an unassociated lending body or take up an option offered by Intagpro Pty Limited (the Manager's holding company). Intagpro Pty Limited will, if a loan option is taken, advance funds of $9,750 on the settlement date for each Joint Venture interest. Security is to be enforced over the Farmer's interest in the Project, i.e., the Farmer's interests in the Joint Venture including the rights obtained as a result of the various agreements entered into and payments made. Finance arrangements organised directly by the Farmer with independent lenders are outside the arrangement to which this Ruling applies.

49. A 10% interest rate will be charged payable yearly in advance totalling $975 for each Joint Venture interest. This loan will be repayable in full over the first 12 months from settlement at the rate of $812.50 per month. The first repayment is required to be made on the first day of the month following the date of settlement of the loan.

50. Further loans will be made over the next four years as detailed in the Loan Deed included in the Draft Prospectus. The further loans will only be made on the basis that interest is payable 12 months in advance and the additional loans are each repayable in the 12 months after the loan is made by equal monthly instalments.

51. The finance is provided as full recourse loans and Intagpro Pty Limited will pursue legal action against outstanding borrowers.

Ruling

Allowable deductions

52. For a Farmer who invests in the Project, the deduction available for the prepaid management fee, the prepaid Lease Rent Contribution fee and prepaid interest to the Lender will depend upon the date that the investment is made and, in some cases, whether or not they are 'small business taxpayers'.

IMPORTANT: Paragraph 53 (relating to 'small business taxpayers') and paragraphs 54 to 56 (relating to taxpayers who are not 'small business taxpayers') describe the deductions allowable under the current law, but Farmers are advised to carefully examine the information contained in paragraphs 59 to 61 relating to proposed changes to the prepayment rules. Farmers who invest in the Project after 1pm, AEST, 11 November 1999 may be affected by these changes.

Deductions for Farmers who are 'small business taxpayers'

53. For a Farmer who is a 'small business taxpayer' and invests in the Project on or before 30 June 2000, the deductions shown in the Table below will be available for the years ended 30 June 2000 to 30 June 2002.

Notes:

(i)

That part of the management fee which is capital or of a capital nature is not an allowable deduction. The deduction for management fees under section 8-1 shown in the Table above is calculated after taking out the capital component of this fee. Both the management fee and lease rent contribution fee have been marked-up in accordance with the formula discussed at paragraphs 70 to 76.

(ii)

Legislative change means that the full deduction will not be allowed in the year ended 30 June 2000 for Farmers who are not 'small business taxpayers'. See paragraphs 54 to 56 and the Example at paragraph 119.

(iii)

Where a Farmer borrows funds from Intagpro Pty Ltd in order to fund their participation in the Joint Venture Project, the interest paid in respect to such loan will be an allowable deduction. Finance arrangements organised with independent lenders are outside the arrangement to which this Ruling applies.

(iv)

Under section 25-25 of the ITAA 1997 loan application fees and/or other up-front borrowing costs for loans covered by this Ruling will be deductible over a 5-year period from the time the loan application is entered into.

(v)

A deduction is allowable under section 387-55 for capital expenditure incurred for Erosion control. The deduction is allowable in the year that the expenditure is incurred.

(vi)

A deduction is allowable under section 387-125 for capital expenditure incurred for acquisition and installation of the irrigation system. The deduction is calculated on the basis of one third of the capital expenditure in the year in which the expenditure is incurred, and one third in each of the next 2 years of income. The amount of the irrigation expense deduction has been calculated by marking-up the expenditure figures shown in the Draft Prospectus, in accordance with the formula discussed at paragraphs 70 to 76, and then multiplying that amount by one third.

(vii)

A deduction is allowable under section 387-165 for capital expenditure incurred for the acquisition and establishment of the olive trees. The deduction is allowable when the olive trees, as horticultural plants, enter their first commercial season. In calculating the deduction, a Farmer must use sections 387-175 and 387-185 to determine the 'effective life' of the olive trees. Olive trees are considered to have an 'effective life' of '30 years or more' which provides a 'write-off rate' of 7%. The project manager will inform investors of when the olive trees enter their first commercial season. The capital cost of establishment expenditure has been calculated in accordance with the formula discussed at paragraphs 70 to 76.

Deductions for Farmers who are not 'small business taxpayers'

54. For a Farmer who invests in the Project on or before 30 June 2000 who is not a 'small business taxpayer' and is carrying on a business, the deduction available in respect of the management fee is determined under subsection 82KZMB(2) using the formula shown in subsection 82KZMA(3) and the percentages shown in Columns 3 and 4 of the Table in subsection 82KZMB(5). (The Example at paragraph 119 illustrates the application of this method).

55. In calculating the deduction available, the term 'expenditure' refers to expenditure for management fees that are otherwise allowable under section 8-1 whose 'eligible service period' ends not more than 13 months after it is incurred by the taxpayer. The 'eligible service period' (defined in subsection 82KZL(1)) means, generally, the period over which the services are to be provided. The project manager will inform affected taxpayers of the number of days in the eligible service period in the expenditure year. This figure is necessary for the deduction for management fees to be calculated.

Year 1: Expenditure incurred on or before 30 June 2000

Available deduction = A + B


Where:

A = $3,204 * (Number of days of eligible service period in the expenditure year.) / (Total number of days of the eligible services period)


B = ($3,204 less A) x 80%


Year 2: Expenditure is incurred on or after 1 July 2000 and on or before 30 June 2001

Available deduction = A + B + C


Where:

A = $1,343 * (Number of days of eligible service period in the expenditure year.) / (Total number of days of the eligible services period )


B = ($1,343 less A) * 60%


C = balance of the Year 1 expenditure not previously deducted


Year 3: Expenditure incurred on or after 1 July 2001 and on or before 30 June 2002

Available deduction = A + B + C


Where:

A = $1,667 * (Number of days of eligible service period in the expenditure year.)/ (Total number of days of the eligible services period)


B = (1,667 less A) x 40%


C = balance of the Year 2 expenditure not previously deducted.


56. For a Farmer who invests in the Project on or before 30 June 2000 who is not a 'small business taxpayer' and is carrying on a business, deductions other than the management fee are shown in the Table below:

Notes:

(viii)

Amounts of less than $1,000 will be 'excluded expenditure' as defined in section 82KZL(1) and are deductible in full in the year in which they are incurred. Where these amounts exceed $1,000 as may be the case where a Farmer has more than one interest in the Joint Venture, deductions are determined the same basis as shown above for prepaid management fees.

Goods and Services Tax

57. For a Farmer who invests in the Project, sections 27-5 or 27-30 of the ITAA 1997 will apply to reduce the amount of any deduction allowable by any GST input tax credit to which the Farmer is entitled or, in the case of section 27-5, a decreasing adjustment that a Farmer has.

Sections 82KZM, 82KZMB, 82KL and Part IVA

58. For a Farmer who invests in the Project the following provisions have application as indicated:

•

expenditure by Farmers who are small business taxpayers is not within the scope of section 82KZM;

•

section 82KZMB applies to expenditure by Farmers who are not small business taxpayers and are carrying on a business;

•

section 82KL does not apply to deny the deductions otherwise allowable; and

•

the relevant provisions in Part IVA will not be applied to cancel a tax benefit obtained under a tax law dealt with in this Ruling.

Proposed new laws

Proposed changes to prepayment rules

59. On 11 November 1999, the Government announced a number of changes to the deductibility of certain prepaid expenditure incurred in respect of certain agreements. Legislation introduced into Parliament, but not yet enacted, provides that these changes will not apply if the relevant expenditure falls within one of the Exceptions to the proposed provisions. Provided the provisions are enacted as introduced, expenditure incurred by investors in this Project will be within Exception 5 to proposed section 82KZME.

60. Where Exception 5 applies to expenditure that has an 'eligible service period' ending not more than 13 months after the expenditure is incurred and is deductible under section 8-1:

•

deductions for 'small business taxpayers' will be allowable in full in the year that the expenditure is incurred; and

•

the amount and timing of deductions for taxpayers who are not 'small business taxpayers' will be determined under sections 82KZMB and 82KZMC of the ITAA 1936.

61. The practical effect of expenditure being within Exception 5 is that the deductions described in paragraphs 53 to 56 of this Product Ruling will not be affected by the proposed changes to the prepayment rules.

Explanations

Section 8-1

62. Consideration of whether management fees are deductible under section 8-1 begins with the first limb of the section. This view proceeds on the following basis:

•

the outgoings in question must have a sufficient connection with the operations or activities that directly gain or produce the taxpayer's assessable income;

•

the outgoings are not deductible under the second limb if they are incurred before the business has commenced; and

•

where all that happens in a year of income is that a taxpayer contractually commits himself to a venture that may not turn out to be a business, there can be doubt about whether the relevant business has commenced, and hence, whether the second limb applies. However, that does not preclude the application of the first limb and determining whether the outgoings in question have a sufficient connection with activities to produce assessable income.

63. The growing of olive trees can constitute the carrying on of a 'primary production business', which is defined in subsection 995-l(1) to include a business of propagating and cultivating plants. Where there is a business, or a future business, the gross sale proceeds from the sale of the olives will constitute gross assessable income. The generation of 'business income' from such a business, or future business, provides the backdrop against which to judge whether the outgoings in question have the requisite connection with the operations that more directly gain or produce this income. These operations will be the planting, tending and maintaining of the olive trees and harvesting the produce.

64. Under the Joint Venture Agreement, Farmers in this Project have rights in the form of a lease over an identifiable area of land consistent with the intention to carry on a business of growing olive trees to produce olives for commercial exploitation. Under the Joint Venture Agreement, Farmers appoint NWRS as Manager of the Joint Venture, to provide services such as planting, cultivating, tending, pruning, fertilising, spraying, maintaining and otherwise caring for the olive trees. From the information provided, Farmers control their investment in the Joint Venture.

65. The Joint Venture Agreement gives Farmers full right, title and interest in the olive trees and their produce and the right to have the olives sold for the Joint Venture Farmers' benefit.

66. The Joint Venture Farmers will not use the land for any purpose other than the growing of olive trees for producing olives. They will appoint NWRS to perform the obligations and duties as imposed on the Manager under the Joint Venture Agreement. The Farmers' degree of control over NWRS, as evidenced by the Constitution of the Project being a Managed Investment Scheme that also incorporates the Joint Venture Agreement, and supplemented by the Corporations Law, is sufficient. Under the Project, the Joint Venture Farmers are entitled to receive regular progress reports on NWRS's activities. In addition, they are able to terminate arrangements with NWRS in certain instances, such as cases of default or neglect. The primary production activities described in the Joint Venture Agreement are carried out on the Farmers behalf.

67. The general indicators of a business, as used by the Courts, are described in Taxation Ruling TR 97/11. Positive findings can be made from the arrangement's description for all the indicators discussed in that Ruling. Farmers who participate in this Project intend to derive assessable income from the Joint Venture Project. This intention is related to projections in the Draft Prospectus that suggest the Joint Venture Project should return a 'before tax' profit to the Farmers, i.e., a 'profit' in cash terms that does not depend on its calculation on the fees in question being allowed as a deduction.

68. Farmers will engage the professional services of a Manager with appropriate credentials. The Manager will subcontract certain works and services, as appropriate. These services are based on accepted commercial agricultural practices and are of the type ordinarily found in ventures that would commonly be said to be businesses.

69. Farmers have a continuing interest in the Project from the time they enter into the Joint Venture. The activities, and hence the fees associated with their procurement, are consistent with an intention to commence regular activities that have an 'air of permanence' about them. The Farmers' activities of conducting in joint venture the growing of olive trees for producing olives or olive products for commercial sale will constitute the carrying on of a business.

70. The activities the Manager is required to undertake are listed in the Management Agreement between the Farmer and Manager (see summary at paragraph 40). Some of these activities are of a capital nature. Project costings obtained from NWRS's tax professional adviser outline how the Farmers' subscription monies will be spent. These monies, which principally consist of a management fee, will be spent on items that are of a revenue or capital nature, while other expenditures are more properly classified as something else.

71. Under the Management Agreement, the management fee is an undissected lump sum in return for which the Farmer obtains services of both a revenue and capital nature. Ronpibon Tin v. Federal Commissioner of Taxation (1949) 78 CLR 47; (1949) 8 ATD 431 provides authority for the apportionment of the management fee in determining deductibility under section 8-1.

72. The joint judgment of the High Court in Ronpibon Tin stated that subsection 51(1) of the ITAA 1936 'contemplates apportionment' and 'there are at least two kinds of expenditure which require apportionment'. One of the described kinds of apportionable expenditure is a 'single outlay or charge which serves both objects indifferently', those objects being previously described as 'expenditure in respect of things or services of which distinct and severable parts are devoted to gaining or producing assessable income and distinct or severable parts to some other cause' (CLR at 59; ATD at 437). The management fee paid by the Farmers is an example of such an expenditure.

73. The management fee paid by the Farmer is for activities that are of a revenue and capital nature and, in accordance with paragraph 8-1(2)(a) of the ITAA 1997, the management fee is not an allowable deduction to the extent it is a loss or outgoing of capital or of a capital nature. That part of the management fee which is deductible under section 8-1 is shown in the table at paragraph 53 (for small business taxpayers) and in the formulae at paragraph 55 (for taxpayers who are not 'small business taxpayers').

74. From the information supplied by NWRS's tax professional adviser, and having regard to the contractual terms of the various agreements, an estimation of the cost of various advantages that will directly accrue to the Farmers has been identified. Some of the costs and profits of the Manager's business do not provide a direct advantage to the investor and these have been apportioned across the items that more directly provide advantages to the Farmers. In allocating these indirect costs to direct revenue and capital costs, the percentage that the indirect costs bear to direct costs is calculated as follows:

(Total projected overheads (indirect expenses) plus profit) / (Total projected direct expenses) * (100/1)


75. The resulting percentage is a 'mark-up' figure that is applied to all direct costs. By applying the mark-up figure to all direct costs, all indirect costs and profits will be absorbed in the costs that more directly advantage the investor, ensuring that the entire sum of subscription monies in years 1 to 3 is referable to one advantage or another.

76. The marked-up revenue component of the management fee is the relevant deduction for management fees under section 8-1. Expenditures that are acceptable as being incurred for the purposes Subdivisions 387-A, 387-B and 387-C are also to be increased by the same mark-up percentage shown above. The expenditures that are deductible under Subdivisions 387-A, 387-B and 387-C are stated in the tables at paragraph 53 (for small business taxpayers) and at paragraph 56 (for taxpayers who are not 'small business taxpayers').

Sections 27-5 and 27-30 - Goods and Services Tax

77. Section 27-30 of the ITAA 1997 operates to deny a deduction that would be otherwise available under section 8-1 for the year ended 30 June 2000 to the extent that the loss or outgoing (incurred after 30 November 1999 and on or before 1 July 2000) includes an amount relating to an input tax credit to which a Farmer will be entitled on or after 1 July 2000.

78. Section 27-5 of the ITAA 1997 operates to deny a deduction, that would be otherwise available under section 8-1, to the extent that the loss or outgoing incurred (on or after 1 July 2000) includes an amount relating to an input tax credit to which a Farmer is entitled or a decreasing adjustment that a Farmer has.

Subdivision 960-Q - Small business taxpayers

79. In this product ruling the term 'small business taxpayer' is relevant for the purposes of certain prepaid expenditure.

80. Whether a Farmer is a 'small business taxpayer' depends upon the individual circumstances of each Farmer and is beyond the scope of this product ruling. It is the individual responsibility of each Farmer to determine whether or not they are within the definition of a 'small business taxpayer'.

81. A 'small business taxpayer' is defined in section 960-335 of the ITAA 1997 as a taxpayer who is carrying on a business and either their 'average turnover' for the year is less than $1,000,000 or their turnover recalculated under section 960-350 is less than $1,000,000.

82. 'Average turnover' is determined under section 960-340 by reference to the average of the taxpayer's 'group turnover'. The group turnover is the sum of the 'value of business supplies' made by the taxpayer and entities connected with the taxpayer during the year (section 960-345).

Section 82KZM - Prepaid expenditure for 'small business taxpayers'

83. Section 82KZM operates to spread over more than one income year a deduction for prepaid expenditure incurred by a 'small business taxpayer' that would otherwise be immediately deductible, in full, under section 8-1. The section applies if certain expenditure incurred under an agreement is in return for the doing of a thing under the agreement that is not wholly to be done within 13 months after the day on which the expenditure is incurred.

84. Under the Joint Venture Agreement, fees will be incurred by a Farmer upon execution of the Joint Venture Agreement. The fees are payable by a Joint Venture Farmer for services that are provided within 13 months from the execution of the Joint Venture Agreement.

85. For this Ruling's purposes, no explicit conclusion can be drawn from the arrangement's description that the fees have been inflated to result in reduced fees being payable for subsequent years. The fees are expressly stated to be for a number of specified services. There is no evidence that might suggest the services covered by the fees could not be provided within 13 months of incurring the expenditure in question. Thus, for the purposes of this Ruling, it can be accepted that no part of the fees are for the doing of things that are not to be wholly done within 13 months of the fees being incurred.

86. On this basis, the basic precondition for the operation of section 82KZM is not satisfied and it will not apply to the expenditure for management fees incurred by Farmers who are 'small business taxpayers' and calculated in accordance with the formula discussed at paragraphs 70 to 76.

Sections 82KZMA - 82KZMD - Prepaid expenditure for taxpayers other than 'small business taxpayers'

87. For a Farmer who is not a 'small business taxpayer' and is carrying on a business, sections 82KZMA to 82KZMD determine the amount of a deduction otherwise allowable under section 8-1 where expenditure is incurred under an agreement for the doing of a thing that is not to be wholly done within the income year in which the expenditure is incurred ('the expenditure year'). Generally, these provisions operate to limit the amount of deduction available in the expenditure year to the amount that relates to that income year.

88. Section 82KZMA is a gateway provision that sets out when the new treatment will apply. Sections 82KZMB and 82KZMC set out the rules for prepayments incurred in the transitional period for things to be done wholly within 13 months. For Farmers investing in the Project, transitional treatment applies to prepayments initially incurred in the 1999-2000 income year. Section 82KZMD governs the deductibility of prepayment expenditure where the eligible service period ends more than 13 months after the date the expenditure was incurred, and does not apply to the Project.

89. The deduction available to Farmers for the management fee will be determined in accordance with the rules contained in section 82KZMB. Because the quantum of the management fee is the same or lower in the second and subsequent years, the capping provisions contained in section 82KZMC will have no practical effect on the deduction available.

90. During the transitional period the amount of the deduction available to Farmers is determined using the formula in subsection 82KZMB(3) and the percentages shown in the table in subsection 82KZMB(5).

91. The Lease Rent Contribution fee is 'excluded expenditure' as defined in section 82KZL(1). Pursuant to section 82KZMA(4), section 82KZMB does not apply to expenditure that is 'excluded expenditure'. 'Excluded expenditure' is deductible in full in the year in which it is incurred.

Interest deductibility

92. Some Farmers intend to finance their investment through a loan facility detailed at paragraphs 48 to 51. Whether the interest is deductible under section 8-1 depends upon the same reasoning as that applied to the deductibility of the lease rent contribution fee and management fee. The interest incurred in the year ending 30 June 2000, and in subsequent years of income, will be in respect of a loan to finance the business operations that are directly connected with the gaining of 'business income' from the Project. Such interest will, thus, also have a sufficient connection with the gaining of assessable income.

93. Where interest is prepaid by an investor who is not a 'small business taxpayer' it is income that would otherwise be subject to section 82KZMB. However, prepaid expenditure that is less than $1,000 is 'excluded expenditure'. Interest prepaid to Intagpro Pty Ltd that is 'excluded expenditure' is deductible in full in the year in which it is incurred for the same reasons advanced above in respect of the Lease Rent Contribution fee.

Proposed changes to prepayment rules

94. The changes announced by the Government, but not yet enacted, to apply from 11 November 1999 will affect all taxpayers that participate in certain agreements and prepay expenditure for up to 13 months. It is proposed that deductions otherwise allowable under section 8-1 of the ITAA 1997 will be spread over the period to which the prepayment relates. Under the proposed changes, there will be no exemption for small business taxpayers and no transitional rules will apply.

95. However, those changes will not apply where the expenditure incurred under the agreement is within one of the Exceptions to the proposed provisions.

96. Exception 5 provides that the expenditure must not be under an agreement to which a product ruling applies, describing expenditure under the agreement as being allowable as a deduction. The product ruling must be made:

(a)

on or before 1 pm (by legal time in the Australian Capital Territory) on 11 November 1999; or

(b)

in response to an application for a product ruling where:

(i)

the application was received by the Commissioner on or before the time specified in paragraph (a); and

(ii)

the Commissioner acknowledged receiving the application.

97. This product ruling is made in response to an application received by the Commissioner on or before 1 pm on 11 November 1999 and acknowledged. Expenditure incurred by investors in the Project will, therefore, be within Exception 5 if the proposed new law is enacted as introduced into Parliament.

Expenditure of a capital nature

98. Any part of the expenditure of a Farmer entering into a primary production business 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. As discussed above, certain components of the management fee payable by the Joint Venture Farmers have been determined as being amounts to cover the capital costs of carrying on their business.

99. Expenditures of this nature can fall for consideration under specific deduction provisions relevant to the carrying on of a business of primary production.

Land clearing

100. The land clearing fee that is identified and payable by a Farmer upon settlement of the Joint Venture, is capital expenditure and not allowable as a deduction under section 8-1. This amount will also have to be calculated using the formula discussed at paragraphs 70 to 76.

Subdivision 387-A - Landcare operations

101. Subdivision 387-A allows a taxpayer who is carrying on a business of primary production on land in Australia, to claim a deduction for capital expenditure on 'landcare operations'. The term 'landcare operation' is defined in section 387-60.

102. In accordance with the Joint Venture Agreement, an erosion control fee is payable by a Farmer upon settlement of the Joint Venture. This is considered to be capital expenditure incurred at a particular time on a 'landcare operation' for the prescribed purposes as set out in section 387-55. A landcare operation, as relevant to the Project, comprises constructing surface or subsurface drainage works on the land primarily and principally for controlling salinity or assisting in drainage control. In order to qualify for a deduction under section 387-55, a business must be carried on at the time the expenditure is incurred.

103. It is considered that a business has commenced at the time the expenditure is incurred. It is accepted that the execution of the Joint Venture Agreement is sufficient to constitute the commencement of a business. The business is considered to have commenced at the time the management fees are incurred by the Joint Venture Farmers. Further, it is considered that the erosion control fee is primarily and principally for the purpose of assisting in drainage control. Accordingly, the expenditure is deductible to a Joint Venture Farmer under section 387-55 in the year of income in which it is incurred.

104. However, a deduction under section 387-55 is denied where the Farmer is entitled to claim a landcare tax offset under section 388-55 and elects to do so.

Subdivision 387-B - Expenditure on conserving or conveying water

105. Subdivision 387-B allows a taxpayer, who is carrying on a business of primary production on land in Australia, to claim a deduction for capital expenditure on conserving or conveying water. The deduction is allowed over a three year period and applies to plant or a structural improvement primarily or principally used for the purpose of conserving or conveying water for use in a primary production business. Irrigation systems of the kind proposed would be covered by this Subdivision.

106. In accordance with the Joint Venture Agreement, an irrigation fee is payable by a Farmer upon settlement of the Joint Venture. This is considered to be capital expenditure incurred on the construction, manufacture, installation or acquisition of a 'water facility', primarily and principally for the purpose of conveying water for use in a primary production business as set out in section 387-125. Examples of a water facility include a dam tank bore, irrigation channel (or similar improvement), pipe and pump. Under section 387-125, there is no requirement that the taxpayer actually own the 'water facility'.

107. The growing of olive trees to produce olives for commercial exploitation is considered to be a primary production business, provided the taxpayer is actually carrying on a business. The Joint Venture Farmers of the Project satisfy the requirements of section 387-125. Accordingly, the irrigation fee is deductible in equal amounts over three (3) years of income, commencing in the year of income that the Farmers incur the expenditure.

108. However, a deduction under section 387-125 is denied where the Farmer is entitled to claim a water facility tax offset under section 388-55 and elects to do so.

Subdivision 387-C - Olive trees and horticultural provisions

109. Subdivision 387-C allows capital expenditure on establishing horticultural plants owned and used, or held ready for use, in Australia in a business of horticulture to be written off for tax purposes. A lessee or licensee of land carrying on a business of horticulture is taken to own the plants growing on that land rather than the actual owner of the land.

110. Under this Subdivision, if the effective life of the plant is less than three years the expenditure can be written off in full; if the effective life of the plant is more than three years an annual deduction is allowable on a prime cost basis during the plant's maximum write-off period. The period starts from the time the plant is first used to produce assessable income. The write-off rate is detailed in section 387-185. For a plant with an effective life in excess of 30 years, as in this Project, the rate is 7%.

111. In accordance with the Joint Venture Agreement, an olive grove establishment fee is payable by a Farmer upon settlement of the Joint Venture. A further fee is payable at the commencement of the second year of the Project. This is considered to be capital expenditure attributable to the establishment of a horticultural plant for use in a horticulture business as set out in Subdivision 387-C. It is considered that the necessary conditions for the application of section 387-165 are satisfied, having regard to the following matters:

•

olive trees fall within the definition of a horticultural plant;

•

the Joint Venture Farmers are treated as owners of the horticultural plant, on the basis that they hold a lease over the relevant lands to which the plant is attached (section 387-210);

•

expenditure of a capital nature will be incurred in the establishment of the olive trees, such expenditure not being deductible under any other provision of the ITAA;

•

the olive trees are considered to have an effective life in excess of 30 years;

•

the activities being carried on by the Farmers in Joint Venture constitute a horticulture business; and

•

no part of the expenditure is in respect of draining swamp or low-lying land or the clearing of land.

112. A deduction is only available in the year in which the plant is first used or held ready for use. A plant is considered to be first used or held ready for use from the beginning of what is expected to be its first commercial season. In the case of this Project, this is considered to be 2004.

113. Section 387-165 provides a write-off for the olive grove establishment fees at the rate of 7% pa. In this case, the deduction for both the first and second year establishment fees will commence in the year ended 30 June 2004.

Section 82KL

114. Section 82KL is a specific anti-avoidance provision that operates to deny an otherwise allowable deduction for certain expenditure incurred, but effectively recouped, by the taxpayer. Under subsection 82KL(1), a deduction for certain expenditure is disallowed where the sum of the 'additional benefit' plus the 'expected tax saving' in relation to that expenditure equals or exceeds the 'eligible relevant expenditure'.

115. 'Additional benefit' (see the definition of 'additional benefit' at subsection 82KH(1) and paragraph 82KH(1F)(b)) is, broadly speaking, a benefit received that is additional to the benefit for which the expenditure is ostensibly incurred. The 'expected tax saving' is essentially the tax that is saved if a deduction is allowed for the relevant expenditure.

116. Section 82KL's operation depends, among other things, on the identification of a certain quantum of 'additional benefit(s)'. Here, there may be a loan provided by Intagpro Pty Ltd to the Joint Venture Farmer. The loan is provided on a full recourse basis, and on commercial terms. Insufficient 'additional benefits' will be provided to trigger the application of section 82KL. It will not apply to deny the deductions otherwise allowable under section 8-1.

Part IVA

117. For Part IVA 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). The Tarwoona Olives Scheme No 1 will be a 'scheme' commencing when the Prospectus is issued. The Joint Venture Farmers will obtain a 'tax benefit' from entering into the scheme, in the form of the deductions allowable under sections 8-1, 25-25, subdivisions 387-A, 387-B and 387-C, that would not have been obtained but for the scheme. However, it is not possible to conclude that the scheme will be entered into or carried out with the dominant purpose of obtaining this tax benefit.

118. Farmers to whom this Ruling applies intend to stay in the scheme for its full term and derive assessable income from the eventual harvesting and sale of the olives. Further, there are no features of the Project that should result in insufficient 'real money' coming into the Manager's hands that might suggest the Project was so 'tax driven' and so designed to produce a tax deduction of a certain magnitude that it would attract the operation of Part IVA.

Example

119. Obligation to prepay expenditure arising on or after 11 : 45am AEST 21 September 1999 - applies to taxpayers who are not small business taxpayers and are carrying on a business :

Joseph Gardener enters into a contract with Pinetree Pty Ltd to manage his one hectare interest in the No 2 Pine Plantation. Joseph's management contract is executed on 20 October 1999 for management services to be provided from 1 June 2000. Under the contract, the first five year's management fees, payable in advance on 1 June each year for services to be provided for the following 12 months, are $6,000 in the first year and $1,200 for each of the following four years. Joseph has been in business for a number of years and has calculated his average turnover for the 1999/2000 income year to be greater than $1 million. Therefore, he is not a small business taxpayer and is subject to the 21 September 1999 changes to the tax laws relating to prepaid expenditure. Joseph is unable to deduct the whole of his prepaid management fees in the years in which they are incurred. The fees are instead deductible over the eligible service period over which the management services will be provided. However, as the law currently stands, Joseph is able to take advantage of certain transitional rules that 'shade-in' the effect of the changes to the prepayment laws.

For 1999/2000 Joseph can claim a deduction of $4,899 for expenditure incurred on or before 30 June 2000 on management fees. This amount is calculated as A + B where:

A = Management fee * (Number of days of eligible service period in the expenditure year.) / (Total number of days of the eligible service period)


= $6,000 * (30/365) = $493


B = (Management fee less A) * 80%


= ($6,000 - $493) * 80% = $4,406


Number of days of eligible service period in the expenditure year

The balance of the $6,000 management fees that were prepaid on 1 June 2000 (i.e., $1,101) is carried forward and can be claimed as a deduction in the 2000/2001-income year.

For 2000/2001, Joseph can claim a deduction of $1,861 as expenditure incurred on or after 1 July 2000 and on or before 30 June 2001 on management fees. This amount is calculated as A + B + C where:

A = $1,200 * (30/365) = $99


B = ($1,200 - $99) * 60% = $661


C = $1,101


Note that the third component (Part C) is the amount carried forward from 1999/2000. As in the first year, the balance of the $1,200 management fees prepaid on 1 June 2001 (i.e., $440) is carried forward and can be claimed as a deduction in the 2001/2002 income year. It should also be noted that in certain circumstances, not present in most projects with product rulings, 'capping provisions' will apply in the second and subsequent transitional years. These are complex and are not explained in this example.

Similarly, for 2001/2002, Joseph can claim a deduction of $980 for expenditure incurred on or after 1 July 2001 and on or before 30 June 2002 on management fees. This amount is calculated as A + B + C where:

A = $1,200 * (30/365) = $99


B = ($1,200 - $99) * 40% = $441


C = $440


Note that the third component (Part C) is again the amount carried forward from 2000/2001. As in the first two years, the balance of the $1,200 management fees prepaid on 1 June 2002 (i.e., $660) is carried forward and can be claimed as a deduction in the 2002/2003-income year.

Detailed contents list

120. Below is a detailed contents list for this Product Ruling:

Commissioner of Taxation
17 May 2000

Not previously issued in draft form

This Ruling has been replaced by PR 2001/29.

References

ATO references:
NO 1999/2674

Related Rulings/Determinations:

PR 1999/95
PR 1999/21
TR 97/16
TR 97/11
TD 93/34
TR 92/20
TR 92/1

Subject References:
afforestation expenses
carrying on a business
commencement of business
fee expenses
forestry
interest expenses
management fees expenses
plantation forestry
product rulings
public rulings
primary production
primary production expenses
producing assessable income
tax avoidance
tax benefits under tax avoidance schemes
tax shelters
tax shelters project

Legislative References:
ITAA 1997 8-1
ITAA 1997 25-25
ITAA 1997 27-30
ITAA 1997 Subdiv 387-A
ITAA 1997 387-55
ITAA 1997 Subdiv 387-B
ITAA 1997 387-125
ITAA 1997 Subdiv 387-C
ITAA 1997 387-165
ITAA 1997 387-175
ITAA 1997 387-185
ITAA 1997 387-210
ITAA 1997 388-55
ITAA 1997 960-Q
ITAA 1997 960-335
ITAA 1997 960-340
ITAA 1997 960-345
ITAA 1997 960-350
ITAA 1997 995-1
ITAA 1936 82KH
ITAA 1936 82KL
ITAA 1936 82KZM
ITAA 1936 82KZMA
ITAA 1936 82KZMB
ITAA 1936 82KZMC
ITAA 1936 82KZMD
ITAA 1936 Pt IVA
ITAA 1936 82KZL
ITAA 1936 177A
ITAA 1936 177C
ITAA 1936 177D