ATO Interpretative Decision
ATO ID 2003/594 (Withdrawn)
Primary Production Income: distributions from WoolStock Australia Ltd
FOI status: may be released
||This ATO ID has been withdrawn from the database because it contains a view of the application of the income tax law to a dividend that was last paid on 1/10/2002 and accordingly doesn't apply to assessments after the 2002-2003 income year. Despite its withdrawal from the database, this ATO Interpretative Decision continues to be a precedential view in respect of decisions for income years up to, and including, the 2002-2003 income year.
||This document has changed over time. View its history.
Status of this decision: Decision Withdrawn 14 May 2010
|CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.|
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Are distributions made by WoolStock Australia Ltd (WoolStock) to a taxpayer, a primary producer who held ordinary shares in WoolStock, classed as primary production income for the purposes of calculating the 'averaging' concession available under section 392-80 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Yes. Distributions made by WoolStock to a taxpayer, a primary producer who held ordinary shares in WoolStock, are classed as primary production income for the purposes of calculating the 'averaging' concession available under section 392-80 of the ITAA 1997.
The taxpayer is a primary producer who in 1997 was granted units in Wool International in respect of their contribution to Australia's wool stockpile.
Each unit represented one whole dollar of wool tax they paid between 1 July 1993 and 30 June 1996.
On 1 July 1999 (conversion time), Wool International was privatised and registered as WoolStock Australia Ltd (WoolStock).
At conversion time the taxpayer was granted one ordinary share in WoolStock for every unit they held in Wool International.
Since conversion time and prior to the liquidation of WoolStock, the taxpayer received a number of distributions.
WoolStock went into liquidation on 24 April 2002.
On 1 October 2002, the liquidator paid a cash dividend of $0.0309 per share to be distributed to all WoolStock shareholders.
The dividend was paid as a final dividend, after which the company was deregistered and the shares cancelled.
Reasons for Decision
Subsection 392-80(2) of ITAA 1997 states that 'assessable primary production income' is the basic assessable income derived from, or resulting from, carrying on a primary production business.
Section 21 of the Wool International Privatisation Act 1999 states that distributions made after conversion time are to be treated as income being derived from, or resulting from, the carrying on of a primary production business under the following circumstances:
- where the shareholder was a unit holder in Wool International, and
- those units were allocated to them in respect of wool tax they paid in the course of carrying on a business.
This provision of Commonwealth legislation ensures that in the taxpayer's circumstances, the WoolStock distributions they received are classed as 'assessable primary production income' for the purposes of subsection 392-80(2) of the ITAA 1997, despite the fact that :
- the pre- and post-liquidation distributions are assessable as dividends under section 44 of the ( Income Tax Assessment Act 1936 (ITAA 1936), and
- part of the post-liquidation distribution is assessable as a capital gain under section 102-5 of the ITAA 1997.
Accordingly, distributions made by Woolstock to the taxpayer are classed as primary production income for the purposes of calculating the 'averaging' concession under section 392-80 of the ITAA 1997.
Date of decision: 20 June 2003
|Year of income:||Year ended 30 June 2003|
Income Tax Assessment Act 1997
Income Tax Assessment Act 1936
Wool International Privatisation Act 1999
Related ATO Interpretative Decisions
ATO ID 2003/593
Siebel/TDMS reference number: 3526432
Business line: Business and Personal Taxes Centre of Expertise
Date of publication: 18 July 2003