Private ruling: Non-commercial losses and the Commissioner's discretion for special circumstances
Date of advice: 15 November 2019
Published: January 2020
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion to allow you to include any losses from your business in the calculation of your taxable income for the 20XX-XX financial year? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. 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: You do not satisfy the income requirement set out in subsection 35-10(2E) of the ITAA 1997. You commenced trading as a sole trader in the medical industry in 20XX. Your business has always been profitable. In the first week of August 20XX you developed an illness. These health issues worsened which resulted in you not being able to get out of bed on XX August 20XX and your appointments needed to be cancelled for the day. Due to your worsened condition, various pathology tests, were done on XX August 20XX. You received medical advice at the time which instructed you to have no direct patient contact for X weeks while tests were being processed. From XX August 20XX to XX September 20XX you had no patient contact. Final testing was done and reported on XX September 20XX. You remain fatigued and unwell until early December 20XX. Due to your health you did not return to work. In September 20XX, an offer was made to buy your medical practice, with proposed settlement to occur on X October 20XX. Unfortunately the offer was withdrawn unexpectedly. As the business was not able to be sold as a going concern, the plant and equipment was sold and another general practitioner took over your premise lease until it expired in December 20XX. You have now ceased carrying on your business activity. You have provided a projected profit and loss statement which shows that but for the special circumstances your business would have produced a tax 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)