Private ruling: Non-commercial business losses
Date of advice: 7 February 2020
Published: March 2020
Ruling period: Financial year ending 30 June 20XX | Financial year ending 30 June 20XX | Financial year ending 30 June 20XX | Financial year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise his discretion to allow you to include any losses from your primary production business in the calculation of your taxable income for the 20XX-XX to 20XX-XX financial years? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted the discretion. It is accepted there is a 'lead time' in the nature of your business activity and you will 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: Your income for non-commercial loss purposes for the 20XX-XX financial year is greater than $XYZ. You carry on a primary production business activity (the activity). You commenced the activity in the 20XX-XX financial year with the purchase of the property and a number of livestock. You plan to breed up your stock to between X00 and X00. Your business plan is to improve the land with sown pastures and fertiliser, divide it into more manageable paddocks, improve water availability and undertake other capital improvements. You submit that since the activity commenced the region has been affected by special circumstances, increasing operational costs and extending the period of time necessary for the activity to become profitable. You have provided a profit and loss statement projecting that the activity will be profitable in the 20XX-XX 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), and | Income Tax Assessment Act 1997 paragraph 35-55(1)(c).