Taxation Determination

TD 93/23

Income tax: are cartons, containers, labels and packing materials used by fruit and vegetable producers in the marketing and distribution of their produce, trading stock of the producers?

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FOI status:

may be releasedFOI number: I 1214091

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. Yes, if ownership of the cartons, containers, labels and packing materials passes to the purchaser. Containers etc that are returnable to the producer are not, however, trading stock of the producer.

2. Subsection 6(1) of the Income Tax Assessment Act 1936 (the Act) defines trading stock to include '... anything produced, manufactured, acquired or purchased for purposes of manufacture, sale or exchange...' [emphasis added].

3. The definition in the Act is wider than the ordinary commercial meaning of the term. Trading stock is usually regarded in a commercial sense to be goods sold by a trader in the same or similiar form that they were in when they were purchased. However, the words 'anything purchased for purposes of sale' in the definition includes all goods purchased for the purpose of being sold, whether as separate items, or as a part of the final product sold.

4. Even though the cartons, containers,labels and packing materials may not be sold as separate items, they are generally an integral part of the marketing and distribution of the produce by the fruit and vegetable producer, and therefore are goods purchased for the purpose of sale within the definition of trading stock in the Act. The comments of R R Gibson, Chairman of Taxation Board of Review No. 1, in Case 115 1 TBRD (NS) 485 at 490 to 492; Case 120 1 CTBR(NS) 568 at 571-573 support this view.

Commissioner of Taxation
11 February 1993

Previously issued as Draft TD92/D166

References

ATO references:
NO Tow 1

ISSN 1038 - 8982

Subject References:
cartons
containers
labels
packing materials
trading stock
fruit producer
vegetable producer

Legislative References:
ITAA 6(1)

Case References:
Case 115
1 TBRD (NS) 485

Case 120
1 CTBR (NS) 568

TD 93/23 history

	Date:	Version:	Change:
You are here	11 February 1993	Original ruling
	3 June 1998	Withdrawn

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