Private ruling: Non-commercial losses - lead time
Date of advice: 18 August 2022
Published: November 2022
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 business activity in the calculation of your taxable income for the 20XX-XX to 20XX-XX financial years? | A1: Yes, it is accepted that it is the nature of the business activity that has prevented you making a tax profit. As such it is accepted that you will make a tax profit within the commercially viable period for your industry. Consequently, the Commissioner will exercise his discretion for the 20XX-XX to 20XX-XX financial years. This private ruling applies for the following periods: Year ended 30 June 20XX Year ended 30 June 20XX Year ended 30 June 20XX Year ended 30 June 20XX

Relevant facts and circumstances: Your income for non-commercial loss purposes exceeds the $250,000 threshold as outlined in subsection 35-10(2E) of the ITAA 1997. You are engaged in a primary production business activity which commenced in 20XX. The primary production exception under subsection 35-10(4) of the ITAA 1997 does not apply as your other assessable income exceeds $XXX. You intend for the core breeding herd to be purebred to ensure quality genetics. You expect the business activity will report a profit in the 20XX-XX financial year. Prior to the 20XX income year, your property was leased on an agistment basis to other livestock producers. The agistment services were affected by drought in the 20XX income year. Due to the loss of agistment income, you obtained employment in corporate agriculture in the 20XX income year. The number of live animals born in the 20XX financial year was significantly impacted by a disease. In the breeding season for the 20XX financial year all of the breeding animals were inseminated by artificial insemination (AI) to reduce risk of disease. The AI program failed and the disease outbreak was attributed to a neighbouring property. You have implemented a long-term vaccination program to prevent this from occurring again. You purchased an additional X breeding animals in 20XX to continue the development of the herd. There is a lag between the time when the core breeding herd number reaches its target and when the associated revenue will commence to flow to the partnership.

Relevant legislative provisions: Income Tax Assessment Act 1997 paragraph 35-55(1)(c)