Product Ruling

PR 1999/29W

Income tax: Margaret River Wine Business

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FOI status:

Notice of Withdrawal

Product Ruling PR 1999/29 is withdrawn with effect from today.

1. Product Ruling PR 1999/29 set out the Commissioner's view on the tax consequences for entities participating in the Margaret River Wine Business (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 The Ruling was withdrawn on 27 June 2001 as interests in the Project were no longer being sold.

2. Although withdrawn, the Ruling continues to apply to Growers who were accepted to participate in the Project between 19 May 1999 and 30 June 1999. It may therefore be relied upon subject to there being no material difference in the arrangement, or in the Growers' involvement in the arrangement.

3. PR 1999/29 ruled that Growers could claim deductions for rent, administration and management fees although the deductibility of losses from the 2000-01 income year was subject to the non-commercial loss rules in Division 35 of the Income Tax Assessment Act 1997 (Division 35). Under that Ruling and PR 2004/41, the Commissioner exercised his discretion to allow losses from this Project to be offset against other assessable income for each income year from 2000-01 to 2002-03. Losses incurred in later years were required to be deferred unless certain conditions were met (see paragraphs 27.1 to 27.4 of PR 1999/29 and 17 to 19 of PR 2004/41).

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
27 June 2001

References

ATO references:
NO T2000/13746

Related Rulings/Determinations:

PR 98/1
TR 92/1
TR 92/20
TR 97/11
TR 97/16
TD 93/34
IT 2001

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

Legislative References:
ITAA1936 82KH(1)
ITAA1936 82KH(1F)(b)
ITAA1936 82KL
ITAA1936 82KL(1)
ITAA1936 82KZM
ITAA1936 Pt IVA
ITAA1936 177A
ITAA1936 177C
ITAA1936 177D
ITAA1997 6-5
ITAA1997 8-1
ITAA1997 8-1(1)(a)
ITAA1997 8-1(1)(b)
ITAA1997 8-1(2)
ITAA1997 Div 35
ITAA1997 35-10
ITAA1997 35-10(4)
ITAA1997 35-30
ITAA1997 35-35
ITAA1997 35-40
ITAA1997 35-45
ITAA1997 35-55
ITAA1997 35-55(1)
ITAA1997 35-55(1)(b)
ITAA1997 Pt 2-25
ITAA1997 387-60
ITAA1997 387-125
TAA 1953 Pt IVAAA
Copyright Act 1968