Private ruling: Non-commercial losses - Commissioner's discretion - special circumstances
Date of advice: 8 April 2020
Published: May 2020
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 non-primary production business in your calculation of taxable income? | 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 this has prevented you meeting one of the four tests. Consequently the Commissioner will exercise his discretion. For more information on non-commercial losses, please visit our website www.ato.gov.au and enter quick code "QC 33774" in the search area at the top of the page

Relevant facts and circumstances: You both satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You run a non-primary production business in a partnership. The business commenced in XXX XXXX. In early XXX XXXX, Person A was injured which left them unable to attend to the business for XX weeks. The business was then required to postpone the current jobs that had been booked. As a result of the injury Person A suffered they were not able to attend to the business, which has caused the business to fail the $20,000 assessable income test and the business activity has resulted in a loss for the XXXX-XX financial year. Figures have been provided that indicate that the business will be profitable in the XXXX-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)(a)