Private ruling: Non-commercial losses - lead time - over $250,000
Date of advice: 10 November 2021
Published: January 2022
Ruling period: Year ended 30 June 20XX | 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)(c) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your primary production business activity in your calculation of taxable income for the 20XX to 20XX financial years? | A1: Yes. Having regard to your full circumstances, it is accepted that it is in the nature of the business activity that has prevented you making a tax profit. It is also accepted that you will make a tax profit within the commercially viable period for your industry. Consequently, the Commissioner will exercise his discretion in the 20XX to 20XX financial years.

Relevant facts and circumstances: You are farmer who produces an essential oil from a certain tree. In 20XX you commenced the business activity in a partnership. In 20XX you purchased a new farm. In your industry, it is accepted that it will take three years before the activity becomes commercially viable. You expect to make a profit from this partnership activity in the year ending 30 June 20XX. Your income for non-commercial loss purposes is over $250,000.

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)(c)