Private ruling: Commissioner's discretion for non-commercial losses
Date of advice: 5 June 2019
Published: July 2019
Ruling period: Year ended 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2017

Ruling: Q1: 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 in the calculation of your taxable income for the 2017-18 and 2018-19 financial years? | A1: 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. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a primary production business which commenced in the 2016-17 financial year. You initially purchased calves in which you were going to fatten, and then breed from. After commencing business operations, due to a disagreement between you and the owner of the property, you sourced an alternate location on which you carried on your primary production business from in the 2017-18 financial year. You intend to make $20,000 in assessable income in the 2019-20 financial year. You also intend to make a tax profit in the 2020-21 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)(b)