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Taxation Determination

TD 92/156

Income tax: do the trading stock provisions apply to newsprint held by a taxpayer carrying on a business of producing newspapers?

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FOI status:

may be releasedFOI number: I 1213270

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, the Determination applies to transactions entered into both before and after its date of issue.

1. Yes. Subsection 6(1) of the Income Tax Assessment Act 1936 defines trading stock as including anything produced, manufactured, acquired or purchased for purposes of manufacture, sale or exchange.

2. We consider that newsprint is trading stock because it is produced, manufactured, acquired or purchased by a newspaper producer for purposes of manufacture of newspapers. This is so even if:

(a)
all revenue is gained from advertising (in the case of free newspapers); or
(b)
sales revenue from the distribution and sale of newspapers does not cover the cost of producing them.

3. Section 28 states that where a taxpayer carries on a business, opening and closing values of trading stock are taken into account in ascertaining the taxpayer's taxable income. Expenditure by a newspaper producer in purchasing newsprint is deductible under subsection 51(1) when the expenditure is incurred. However, section 28 applies to require the opening and closing values of newsprint to be taken into account in ascertaining the newspaper producer's taxable income. The overall effect of section 28 is to allow a deduction for the newsprint on a usage basis.

Commissioner of Taxation
17/09/92

Previously Draft TD 92/D103

References

ATO references:
NO BANTD3

ISSN 1038 - 3158

Related Rulings/Determinations:

TD 92/155
IT 2289

Subject References:
deductions
newspaper producer
newsprint
trading stock

Legislative References:
ITAA 6(1)
ITAA 28
ITAA 51(1)

TD 92/156 history
  Date: Version: Change:
You are here 17 September 1992 Original ruling  
  29 November 2006 Original ruling + note Repeal provision note
  23 September 2009 Consolidated ruling Addendum

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