Product Ruling

PR 2000/93W

Income tax: Margaret River Wine Business (Project No.2)

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FOI status:

Withdrawal

1. Product Ruling PR 2000/93 set out the Commissioner's view on the tax consequences for entities participating in the Margaret River Wine Business (Project No.2) (the Project) by entering into a Lease Agreement and a Management Agreement for the purpose of carrying on a commercial viticulture and wine production business. The Ruling was withdrawn on 1 July 2003 as interests in the Project were no longer being sold.

2. Although withdrawn, the Ruling continues to apply to Members who were accepted to participate in the Project between 23 August 2000 and 31 December 2000. It may therefore be relied upon subject to there being no material difference in the arrangement, or in the Members' involvement in the arrangement.

3. PR 2000/93 ruled that Members could claim deductions for lease and management fees although the deductibility of losses was subject to the non-commercial loss rules in Division 35 of the Income Tax Assessment Act 1997 (Division 35). The Commissioner exercised his discretion to allow losses for each income year from 2000-01 to 2003-04 to be offset against other assessable income. Losses incurred in later years were required to be deferred unless certain conditions were met (see paragraphs 50 to 52 of PR 2000/93).

4. On 24 September 2008 the Supreme Court of Western Australia ordered that the scheme be wound up. The termination of the Project's Agreements on 19 March 2009 meant that Growers were no longer carrying on their own business and, although no further Project fees were incurred, losses after that date are not subject to Division 35.

Commissioner of Taxation
23 August 2000

Not previously issued in draft form

References

ATO references:
NO 2000/004692

Related Rulings/Determinations:

PR 2000/93A
PR 1999/95
TR 92/1
TR 97/11
TR 97/16
TD 93/34
IT 175
IT 2001
TR 92/20
TR 98/22

Subject References:
carrying on a business
commencement of business
fee expenses
interest expenses
management fees
primary production
primary production expenses
management fee expenses
producing assessable income
product rulings
public rulings
schemes and shams
taxation administration
tax avoidance
tax benefits under tax avoidance schemes
tax shelters projects

Legislative References:
ITAA 1997 6-5
ITAA 1997 8-1
ITAA 1997 17-5
ITAA 1936 82KL
ITAA 1936 82KZM
ITAA 1936 82KZMB
ITAA 1936 82KZMC
ITAA 1936 82KZMD
ITAA 1936 82KZMF
ITAA 1936 Pt IVA
ITAA 1936 177A
ITAA 1936 177C
ITAA 1936 177D
ITAA 1997 Division 27
ITAA 1997 Division 35
ITAA 1997 35-10
ITAA 1997 35-30
ITAA 1997 35-35
ITAA 1997 35-40
ITAA 1997 35-45
ITAA 1997 35-55
ITAA 1997 Part 2-25
ITAA 1997 Subdiv 960-Q
ITAA 1997 960-335
ITAA 1997 960-340
ITAA 1997 960-345
ITAA 1997 960-350