Private ruling: Non-commercial business losses and the Commissioner’s discretion
Date of advice: 18 October 2018
Published: December 2018
Ruling period: Financial year ended 30 June 20XX | Financial year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in to allow you to include any losses from your business activity in the calculation of your taxable income for the 20XX-XX and 20XX-XX financial years? | A1: Yes .

Relevant facts and circumstances: You satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997 . You purchased a property in 20XX, to undertake a farming business activity (the activity). The activity was not purchased as a going concern. You immediately began clearing and preparing the land for planting 20XX. Harvesting will commence in 20XX and some income will be received soon after. However you do not expect to receive all of the income from the harvest until early 20XX-XX financial year. As such the activity will be in a loss situation for the 20XX-XX and 20XX-XX financial years. You expect the activity to meet the assessable income test and become profitable in the 20XX-XX 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)(b)