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Description - Other Managed Investments

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Description of private unit trusts

Private unit trusts are:

Description of ostrich and emu farming ventures

Investors in ostrich and emu farming ventures fall into three categories, described in the following table.    

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Assessment of income from ostrich and emu farming ventures

9.5.6/Deemed Income from Other Managed Investments

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Investor

Description

Speculative investors

These investors buy chicks or juvenile birds which are:

  • reared by farmers until they are 2 years old, and
  • then sold for a profit.

The Australian Taxation Office:

  • assesses any profits under the Capital Gains Tax rules, and
  • allow expenses incurred in rearing the birds to be added to the initial cost base.

Share farming investors

These investors purchase birds, but instead of selling them after 2 years, enter into a share farming arrangement with the farmers.

This involves an agreement where:

  • farmers can recover costs and make their own profits, and
  • investors generally receive 60% of the proceeds of future sales.

The ATO:

  • views this arrangement as a genuine primary production business, and
  • accepts standard accounting methods for calculation of profit or loss.

Investors in a managed investment scheme

These are investors whose funds are pooled and who do not hold specific livestock as their own investment asset.

The investment scheme must comply with Australian Securities Commission requirements for the registration and issue of a prospectus.

Description of afforestation projects

Participation in afforestation schemes typically involves purchasing an identified parcel of trees:

  • at a specific location, and
  • under a purchase and sale agreement, such as the SAPFOR Forest Scheme or crop farming such as:
  • macadamia nuts,
  • aloe vera, and
  • aquaculture projects.

The promoter of the afforestation scheme:

ATO ruling on afforestation

The ATO treats profits, losses, and business expenses under business rules. ATO Ruling IT 360 outlines the ATO position that, 'where a person alone or in association with others acquires an interest in an identifiable area of land and enters into an agreement to have that land developed, planted, and maintained by a management company for the purpose of growing forest trees it is accepted that the person may be carrying on a business of afforestation'.