Private ruling: Commissioner's discretion - special circumstances
Date of advice: 10 November 2025
Published: 5 January 2026
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion under paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (the ITAA 1997) to allow you to include losses from your primary production business activity in calculating your taxable income for the 20XX-XX income year? | 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 these prevented you from making a tax profit. Consequently, the Commissioner will exercise his discretion under paragraph 35-55(1)(a) of the ITAA 1997.

Relevant facts and circumstances: Your income for the purpose of subsection 35-10(2E) of the ITAA 1997 is over $250,000 for the 20YY-YY income year. You commenced your farming activities in 20XX. Your main operation involves xx Breeding. Additionally, you acquire xx for fattening purposes depending on the season. You stated that the critical times for rainfall are during autumn (March - May) to promote pasture growth before winter, and again in late winter to spring (August - October). Drought conditions, which began in the previous years, impacted the relevant year. The rainfall data recorded at the Bureau of Meteorology station nearest to your farm showed less rainfall was received during the relevant year compared to the previous years. Having been impacted by the severe drought condition, you received support payments from your local council under a package provided by the State government. Drought impact The ongoing drought has significantly affected the availability and cost of stockfeed, livestock conception rates, and animal condition, which is reflected in reduced selling prices. Selling prices You began reducing livestock numbers at the start of the 20XX-XX income year, selling more animals than would typically be sold under normal circumstances. Livestock sold during the drought were in poor condition due to failing pastures, resulting in lower sale prices. Availability and cost of stockfeed Sourcing stockfeed particularly hay has become increasingly difficult and expensive. With no local xx available, you need to purchase large quantities from another state at a premium price. Mitigation measures To better manage pasture and feeding, you established containment paddocks. This required additional capital investments. You also acquired equipment to handle large xx on your farm. Impact in the relevant year The drought has continued and worsened, severely affecting your farm's ability to generate a profit in the ruling year. You were recently forced to sell all your breeding xx, as the cost of feeding the animals exceeded their market value. You provided comparable financial information for the relevant income years, which showed a tax loss in the ruling 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)