Product Ruling

PR 2003/29A - Addendum

Income tax: TFS Gold Card Sandalwood Project 2003

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FOI status:

may be released

Addendum

This Addendum amends Product Ruling PR 2003/29 to reflect changes to the simplified tax system legislation from the 2005-06 income year onwards.

PR 2003/29 is amended as follows:

1. Paragraph 2

Insert dot point:

•

Division 328 of the Income Tax (Transitional Provisions) Act 1997;

2. Paragraph 56

After the paragraph insert:

56A. Changes to the STS rules apply from 1 July 2005. From that date, 'STS taxpayers' may use the accruals accounting method. For a Grower participating in the Project, the recognition of income and the timing of tax deductions is different depending on whether the Grower who was an 'STS taxpayer' prior to 1 July 2005 continues to use the cash accounting method (called the 'STS accounting method') - see sections 328-120 and 328-125 of the Income Tax (Transitional Provisions) Act 1997.

3. Paragraph 59

Omit the paragraph; substitute:

59. A Grower who is not an 'STS taxpayer' for the 2005 and prior income years or is an 'STS taxpayer' using the accruals method of accounting for the 2006 and later income years, recognises ordinary income from carrying on the business of afforestation at the time that income is derived.

4. Paragraph 60

Omit the paragraph; substitute:

60. A Grower who is an 'STS taxpayer' for the 2005 and prior income years or is an 'STS taxpayer' using the cash method of accounting for the 2006 and later income years, recognises ordinary income from carrying on the business of afforestation at the time that income is received.

5. Paragraph 62

Omit the paragraph; substitute:

62. However, if for any reason, an amount shown or referred to in the Tables below is not fully paid in the year in which it is incurred by a Grower who is an 'STS taxpayer' for the 2005 and prior income years or is an 'STS taxpayer' using the cash accounting method for the 2006 and later income years, then the amount is only deductible to the extent to which it has been paid, or has been paid for the Grower. Any amount or part of an amount shown in the Tables below which is not paid in the year in which it is incurred, will be deductible in the year in which it is actually paid.

6. Paragraph 64

(a) Omit the Table; substitute:

(b) Omit Note (iii); substitute:

(iii)

The annual Rent and the annual Management Fees for Year 1 and Year 2 are for services to be provided within the expenditure year and are deductible in the year in which they are incurred (where the Grower is not an 'STS taxpayer' for the 2005 and prior income years or is an 'STS taxpayer' using the accruals accounting method for the 2006 and later income years) or the year in which they are paid (where the Grower is an 'STS taxpayer for the 2005 and prior income years or is an 'STS taxpayer' using the cash accounting method for the 2006 and later income years.)

7. Paragraph 65

Omit the Table; substitute:

8. Paragraph 115

Omit the paragraph; substitute:

115. On this basis, provided a Grower incurs this expenditure on the dates set out in the Management Agreement and the Lease Agreement (see paragraphs 32 to 38 of this Ruling), then the basic precondition in subsection 82KZME(2) of the ITAA 1936 is not satisfied and, in these circumstances, section 82KZMF of the ITAA 1936 will have no application. Deductions for these fees will be deductible in the year in which they are paid (where the Grower is an 'STS taxpayer for the 2005 and prior income years or is an 'STS taxpayer' using the cash accounting method for the 2006 and later income years) or the year in which they are incurred (where the Grower is not an 'STS taxpayer' for the 2005 and prior income years or is an 'STS taxpayer' using the accruals accounting method for the 2006 and later income years).

This Addendum applies on and from 1 July 2005. Commissioner of Taxation 28 June 2006

Commissioner of Taxation
28 June 2006

References

ATO references:
NO 2005/18404