Private ruling: Commissioner's discretion - non-commercial losses
Date of advice: 22 May 2026
Published: 3 August 2026
Ruling period: Year ended DD MM 20YY
Date scheme commenced: 1 July 20YY

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 2024-25 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 20YY-YY financial year.

Relevant facts and circumstances: You do not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a primary production business in a partnership, which commenced at a specified time. You experienced prolonged drought conditions, which reduced your stock numbers down to nil and disrupted business operations. You experienced substantial increases in operating costs, limiting your ability to maintain and expand stock numbers. Drought conditions affected the profitability of your business activity and you incurred a subsequent loss. Your business activity requires a specified amount of lead time to build stock numbers, before profitability can reasonably be achieved (depending on the depth of sell down, market conditions and weather recovery). You are currently rebuilding stock and expect your business activity to return to profit in the 20YY-YY 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)