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This final Taxation Ruling was issued on 17 October 2007. It was previously released in draft form as TR 2007/D2: see 2007 TAXVINE No 13 (10) (13 April 2007).

The Ruling deals with the application of s 8-1 of ITAA 1997 to contributions by investors to registered agricultural managed investment schemes. The Ruling also deals with the question of whether interim and final returns to investors are, either wholly or in part, an amount of ordinary income for the purposes of s 6-5, or an amount of "statutory income" for the purposes of s 6-10.

In relation to the schemes considered in the Ruling, the ATO concludes that investors' contributions are capital, or of a capital nature, and not deductible under s 8-1. Further, provided that Division 6C of Part III of the ITAA 1936 does not apply, interim and final returns are "statutory income" for the purposes of s 6-10 of the ITAA 1997.

The Ruling applies to losses or outgoings incurred, and amounts included in assessable income, in relation to schemes begun to be carried out on and after 1 July 2008. However, if a test case is finalised prior to 30 June 2008 and confirms the ATO view, product rulings will not issue past the date of the decision.

As a result of the issue of TR 2007/8, Taxation Ruling TR 2000/8 is withdrawn with effect from 1 July 2008.

In a media release issued on 17 October 2007, Acting Tax Commissioner Greg Farr said the Ruling follows consideration of comments on the draft ruling and confirms the ATO’s reconsidered view that investor contributions are capital in nature and therefore not deductible. He added: “We expect industry to present a test case in the near future that will be expedited through the Federal Court, with a view to hopefully obtain judicial guidance by the end of the transitional period, 30 June 2008."

For a copy of TR 2007/8, go here

For a copy of TR 2000/8W, go here

For a copy of the ATO media release, No 2007/50, go here

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