Private ruling: Non-commercial losses
Date of advice: 19 March 2018
Published: June 2018
Ruling period: Financial year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in subparagraph 35-55(1)(c) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include losses from your business activity of sugar cane farming in the calculation of your taxable income for 20XX financial year? | 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 for the 20XX financial year.

Relevant facts and circumstances: You do not satisfy the income requirement set out in subsection 35-10(2E) ITAA 1997. You purchased a fully developed primary production business as a going concern in November 20XX. The purchase of the primary production business was at the end of the harvest season. The seller continued to receive payments for the existing crop. Your business activity commenced in the 20XX financial year. You started cultivating crop from the time the settlement of the farm occurred. You expect to grow approximately XXXX tonnes of crop in the first season and XXXX tonnes in the second year. You expect to make a tax profit in the 20XX financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 35-55