Private ruling: Non-commercial losses and the Commissioner’s discretion.
Date of advice: 24 April 2018
Published: July 2018
Ruling period: Year ending 30 June 20XX | 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 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

Relevant facts and circumstances: You satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You are carrying on a business activity. You have been affected by special circumstances which have impacted your ability to perform your business duties. Due to limitations you have decided to explore other work available that you will be able to undertake. This will enable your business to produce assessable income. You are currently on income protection. Your insurer will be assisting you with returning to work. As a result of the special circumstances, this has caused your business to fail the $20,000 assessable income test and your business activity has resulted in a loss for the XXXX-XX and XXXX-XX financial years. You have provided figures 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)