Private ruling: Non-commercial losses - special circumstances
Date of advice: 2 December 2022
Published: 30 January 2023
Ruling period: Year ended 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 activity in your calculation of taxable income for the year ended 30 June 20XX? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner will exercise his discretion to allow you to include any losses from your business activity in the calculation of your taxable income for the year ended 30 June 20XX. It is accepted that there is a 'special circumstance' that prevented you from meeting the non-commercial losses test. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au.

Relevant facts and circumstances: You are in a partnership that operates a business of XXX shooting. Once shot the XXX are then sold to an abattoir. The Partnership pays for a license to operate. The Partnership commenced its business in the 20XX income year. You will satisfy the less than $250,000 income requirement as set out in subsection 35-10(2E) of the ITAA 1997 in the 20XX income year. You are responsible for shooting the XXX and need to travel to remote places at night to do so. You provided us with The Partnership's financial statements for the 20XX and 20XX income years. The Partnership made a profit in the 20XX income year. The Partnership made a loss in the 20XX income year. During the 20XX income year circumstances outside of your control prevented The Partnership from making a profit. During the month of July 20XX, you were diagnosed with a medical condition and required to take medication. You continued to use the medication during the month of August 20XX. Due to the risks associated with the medication you were not able to travel to remote places far from help to conduct the shooting activities. You provided us with consultation notes from your doctor and written results from your x-rays. During the months of January 20XX and February 20XX The Partnership was affected by floods. As a result of the floods there were road closures, damage to properties and paddocks under water and you were not able to conduct the shooting activities. Heavy rainfall continued throughout March and April which delayed road repairs and made the land untraversable due to it being too soft further limiting your ability to conduct the shooting activities. You provided news articles confirming flooding and rain fall during this period.

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 subsection 35-30 | Income Tax Assessment Act 1997 subsection 35-55(1)(a)