Product Ruling

PR 1999/11A - Addendum

Income tax: The Larenta Olive Project

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FOI status:

may be released

Addendum

At paragraph 11, delete:

30 June 2002

and replace with:

30 June 2001

Add to the Ruling part of the Product Ruling:

Division 35 - deferral of losses from non-commercial business activities

Section 35-55 - Commissioner's discretion

For a Grower who is an individual and who entered the Project on or after 5 May 1999 and prior to any withdrawal of this Product Ruling the rule in section 35-10 may apply to the business activity comprised by their involvement in this Project. Under paragraph 35-55(1)(b) the Commissioner has decided for the income year ended 30 June 2001 that the rule in section 35-10 does not apply to this business activity provided that the Project has been, and continues to be carried on in a manner that is not materially different to the arrangement described in this Ruling.

Furthermore, for a Grower who is an individual and:

•

who entered the Project on or after 1 July 1999 and prior to any withdrawal of this Product Ruling; and/or

•

who is not registered nor required to be registered for GST and is therefore not entitled to claim input tax credits;

under paragraph 35-55(1)(b) the Commissioner has decided for the income year ended 30 June 2002 that the rule in section 35-10 does not apply to this business activity. This is provided that the Project has been, and continues to be carried on in a manner that is not materially different to the arrangement described in this Ruling.

This exercise of the discretion in subsection 35-55(1) will not be required where, for any year in question:

•

a Grower's business activity satisfies one of the objective tests in sections 35-30, 35-35, 35-40 or 35-45; or

•

the 'Exception' in subsection 35-10(4) applies.

Where, either the Grower's business activity satisfies one of the objective tests, the discretion in subsection 35-55(1) is exercised, or the Exception in subsection 35-10(4) applies, section 35-10 will not apply. This means that a Grower will not be required to defer any excess of deductions attributable to their business activity in excess of any assessable income from that activity, i.e., any 'loss' from that activity, to a later year. Instead, this 'loss' can be offset against other assessable income for the year in which it arises.

Growers should not see the Commissioner's decision to exercise the discretion in paragraph 35-55(1)(b) as an indication that the Tax Office sanctions or guarantees the Project or the product to be a commercially viable investment. An assessment of the Project or the product from such a perspective has not been made.

Commissioner of Taxation
6 June 2001

References

ATO references:
NO T2000/13746