Private ruling: Non-commercial business losses and the Commissioner's discretion
Date of advice: 22 July 2017
Published: November 2017
Ruling period: Year ended 30 July 2016 | Year ended 30 July 2017
Date scheme commenced: 1 July 2015

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) of the ITAA 1997 to allow you to include any losses from your primary production business activity (the activity) in your calculation of taxable income for the 2015-16 and 2016-17 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 one of the four tests being passed. It is also accepted that you will pass one of the four tests or make a tax profit within the commercially viable period for your industry. Consequently the Commissioner will exercise his discretion in the 2015-16 and 2016-17 financial years. For more information on non-commercial losses, please visit our website at https://www.ato.gov.au/Business/Non-commercia l-losses, or search quick code QC 33774 at www.ato.gov.au.

Relevant facts and circumstances: You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You commenced carry on the activity in the 2015-16 financial year. The activity is primary concerned with growing crops. The crops from the first year of harvest (2016-17 financial year) was kept for 'feed stock’, to replant in the following year. You advise of a lead time of two years for your industry. You intend to make $X in assessable income in the 2017-18 financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Paragraph 35-55(1)(b).