Non-forestry agribusiness managed investment schemes have been given a 12-month reprieve on tax treatment by the Australian Taxation Office (ATO).
Originally the ATO was not going to issue any more product rulings for non-forestry schemes after June 30 this year, but the Tax Commissioner Michael D’Ascenzo said this has been deferred to the end of the next financial year.
“The decision follows consultation with agribusiness industry on their forward arrangements and will give the industry time to adjust their financial arrangements accordingly,” he said.
“It should also allow sufficient time for our reconsidered view to be tested in the courts.”
The ATO will also test the new product ruling arrangements on an agribusiness MIS in the courts.
McMahon Clarke Legal partner Langton Clarke said he believed the ATO will want to run test cases on both forestry and non-forestry schemes.
“The ATO want to test their new view in both forestry and non-forestry schemes,” he said.
“This is because investors in forestry schemes may still wish to claim deductions on the basis they are carrying on a business rather than rely on the proposed statutory provision, which will mandate a deduction if certain threshold requirements are met.”
D’Ascenzo said if a decision was achieved on these test cases before June 30, 2008, it may stop issuing product rulings from the date of the court judgement.
Federal Assistant Treasurer Peter Dutton has welcomed the transition arrangements in light of lobbying by agribusiness managers such as Great Southern, Macquarie and Timbercorp.
“The 12 month transition period will give the industry time to consider their financial arrangements and plan for the future,” he said.
“It is important to note that investments in agribusiness MIS that are covered by existing product rulings will not be affected by the draft ruling.”
Meanwhile, the new draft tax ruling outlining the changes will be issued in the middle of April and then be open for comment for six weeks.
