A T O home
Legal Database
Access the database 
Browse database
View last document
Quick access 
View legislation
View a document
PDF Email Cross Reference Material Previous/Next Section Contents Previous/Next Result
Printable version

Product Ruling

PR 2002/59WA1 - Addendum to Withdrawal

Income tax: Great Southern Plantations 2002 and 2003 Projects

Attention Please note that the PDF version is the authorised version of this ruling.
Go to notice View the consolidated version for this notice.

Addendum to Withdrawal

This Addendum amends the Product Ruling PR 2002/59 withdrawal notice to provide information about the consequence for Growers following the disposal of the Growers' rights, titles and interests in the Project.

PR 2002/59W is amended as follows:

1. Preamble

Omit the preamble.

2. Paragraph 1

Omit the paragraph, substitute:

1. Product Ruling PR 2002/59 sets out the Commissioner's opinion on the tax consequences for persons participating in the Great Southern Plantations Project 2002 and 2003 ('the Project'), a forestry managed investment scheme, entered into for the purpose of the establishment and tending of Eucalypt trees for felling in Australia.

2. This Product Ruling has been withdrawn in accordance with subsection 358-20(1) of Schedule 1 to the Taxation Administration Act 1953 , which states the Commissioner may withdraw a public ruling either wholly or to an extent.


3. The Responsible Entity, Gunns Plantations Limited (in liquidation) advised that as part of the liquidation process of this entity, the Growers' rights, titles and interests in the Project were disposed of, by 5 May 2017.

4. This withdrawal notice sets out the tax outcomes for Growers or their associates arising as a consequence of the disposal.

Assessable Income

5. The proceeds from the sale of their rights, titles and interests in the Project is in respect of the Growers' interest in the standing timber as the other associated rights, titles and interests are considered to have no value.

6. The sale of standing timber under the liquidation process is the disposal of trading stock outside the ordinary course of business. The treatment of assessable income on disposal of trading stock outside the ordinary course of business is described in section 70-90.1

7. By way of section 70-90, Growers are required to include the market value of that trading stock on the day of disposal, in their assessable income for the year of that disposal.

8. For the purposes of section 6-5, Growers are required to include their share of the harvest proceeds and other amounts payable to the Growers under the liquidation process, in their assessable income in the year they are derived.

9. The final amount to be distributed to the Growers by the liquidator (the Net Distribution Amount) will not be known until just prior to the distribution. This will occur when all costs and competing claims have been finalised as part of the liquidation process.

10. As a consequence, there was no simple way for Growers to determine the market value of their interest in the trading stock, at the time of disposal.

11. Notwithstanding the requirement to return the market value of their interest in the trading stock as assessable income in the year in which the disposal happened, and the requirement to return harvest proceeds and the other amounts referred to in paragraph 8 of this notice in the year in which they are derived, the Commissioner will accept that Growers in the Project can:

 treat the Net Distribution Amount as the amount required to be returned as assessable income, and
 return the Net Distribution Amount, in their assessable income in the income tax year in which the distribution is received.

12. Class Ruling CR 2016/19 Income tax: liquidation - Great Southern Plantation and Gunns Plantations Limited Woodlot Schemes sets out the tax outcomes for Growers or their associates arising as a consequence of the disposal of their rights, titles and interest in the Project.


13. Paragraphs 62 to 74 of PR 2002/59 explain how the Growers' participation in the Project constitutes the carrying on of a business of primary production by the Growers.

14. Growers that continued to have an interest in the Project up until 5 May 2017 were entitled to claim deductions for the expenditure outlined in paragraphs 53 or 56 of PR 2002/59.

15. Any expenditure that a Grower incurred prior to 5 May 2017 but did not actually pay is not deductible, because these amounts have been taken into account in calculating the Net Distribution Amount.

16. From 5 May 2017, Growers in the Project ceased carrying on a business of primary production, and are no longer entitled to claim deductions, with the exception of interest which may continue to be deductible. See paragraphs 19 and 20 of this notice.

Deferral of losses from non commercial business activities

17. Division 35 only applies to individuals, alone or in partnership, in income years in which they are carrying on a business activity. In PR 2002/59, the Commissioner conditionally undertook to exercise his discretion under paragraphs 35-55(1)(b) or 35-55(1)(c), to allow losses incurred by Growers to be offset against other assessable income in the income year in which the losses arose, for the relevant income years.

18. The Commissioner's discretion under paragraphs 35-55(1)(b) and 35-55(1)(c) is no longer required in respect to the Project for the year in which the Growers' interests in the Project were disposed of, and for later income years.


19. Where Growers have used loans to finance their participation in the Project, any interest incurred on the loan will continue to be deductible under section 8 1 in the year it is incurred, provided the requirements outlined in Taxation Ruling TR 2004/4 Income tax: deductions for interest incurred prior to the commencement of, or following the cessation of, relevant income earning activities are satisfied.

20. The deductibility of interest on such loans is unaffected by the loss deferral rules in Division 35, from the year in which the Growers dispose of their interests in the Project, and for later income years. See paragraphs 17 and 18 of this notice.

3. Related Rulings/Determinations

Omit the references; substitute 'TR 2004/4; CR 2016/19'.

4. Subject references

Omit the references.

5. Legislative references

Omit the references; substitute:

 ITAA 1997
 ITAA 1997 6-5
 ITAA 1997 8-1
 ITAA 1997 Div 35
 ITAA 1997 35-55(1)(b)
 ITAA 1997 35-55(1)(c)
 ITAA 1997 70-90
 TAA 1953
 TAA 1953 Sch 1 358-20(1)

6. Case References

Omit the references.

Commissioner of Taxation

19 July 2017


You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).


ATO references:

ISSN: 2205-6114


Top of page
More information on page