Private ruling: non-commercial losses
Date of advice: 8 August 2019
Published: October 2019
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 primary production activity in your calculation of taxable income for the 20XX-XX financial year? | A1: Yes Having regard to your full circumstances, the Commissioner has granted his discretion as it is accepted that your business activity was affected by special circumstances outside your control which caused you to make a loss. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: Your income for non-commercial loss purposes for the financial year 20XX-XX is more than $250,000. You are carrying on a business (the activity). You commenced a primary production business activity in 19XX. In the 20XX-XX financial year your property experienced severe drought. Due to this it has made it extremely difficult to finish and fatten cattle. Although you had fodder stored for such an event, you never anticipated the amount of labour and fodder you would use. In the 20XX-XX financial year you have been forced to sell part of your herd in order to sustain your farming enterprise as you did not have the fodder to sustain them. You were also forced to sell your calves at four months of age instead of the normal 12-18 months. In the 20XX -XX financial year you will attempt to replenish your herd numbers with the purchase of approximately 70 head. You expect to make a profit 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)(a)