Private ruling: Non-commercial losses - Commissioner's discretion
Date of advice: 19 October 2021
Published: January 2022
Ruling period: 1 July 20XX to 30 June 20XX | 1 July 20XX to 30 June 20XX | 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: A2: Yes Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted there is a 'lead time' in the nature of your business activity and you will pass a test or make a tax profit within your industry's commercially viable period.

Relevant facts and circumstances: You do not satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997 for the 20XX-XX income year. Property XXXX You purchased the property located in XXXX. You operate your primary production activity on this property. The property experienced heavy rain events which caused substantial damage to the plantation and as a result the trees fail to produce to full capacity. You met, or expected to meet assessable income test, the real property test and the other assets test for the 20XX-XX and 20XX-XX income years. You estimate that, had it not been for the damage caused by the heavy rain events that you would have made a tax profit for the 20XX-XX and 20XX-XX income years. Property XXXX You purchased the property located at XXXX. You operate your primary production activity on this property as a partner. The property was a previous existing business with a previous plantation of trees. These were XXXX years old at the time of purchase and had not completed their recommended initial lead time for growth which is estimated to be XXXX years based on industry standards. Your business plan expects to produce a profit in 20XX-XX financial year

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


Question One: Will the Commissioner exercise his discretion in subsection 35-55(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business activity at the XXXX property in the calculation of your taxable income for the 20XX-XX and 20XX-XX income years? | Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control. It is also accepted that, but for the special circumstances, you would have made a tax profit. Consequently, the Commissioner will exercise his discretion. | Question Two: Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business activities at the XXXX property in the calculation of your taxable income for the 20XX-XX, 20XX-XX and 20XX-XX income years?