Private ruling: Commissioner's discretion for non-commercial business losses
Date of advice: 10 December 2021
Published: March 2022
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business activity in your calculation of taxable income for the 20XX financial year? | A1: Yes Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control and that these prevented you from making a tax profit. Consequently, the Commissioner will exercise his discretion in the 20XX financial year.

Relevant facts and circumstances: You carry on a XX and XX business. You commenced business operations in the 20XX financial year. You do not satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. In the 20XX financial year COVID-19 impacted your business activity. You were unable to carry out your business activity due to the lockdown restrictions put in place. Your business has previously met the assessable income and profits test. You intend to return to profit in the 20XX financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 35-10(1) | Income Tax Assessment Act 1997 subsection 35-10(2) | Income Tax Assessment Act 1997 subsection 35-10(2E) | Income Tax Assessment Act 1997 paragraph 35-55(1)(a)