Private ruling: Non-commercial losses - special circumstances
Date of advice: 21 September 2023
Published: 30 October 2023
Ruling period: 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business activity in your calculation of taxable income for the 20XX-XX financial year? | A1: Yes Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control and that these prevented you from making a tax profit. Consequently, the Commissioner will exercise his discretion in the 20XX-XX financial year.

Relevant facts and circumstances: You do not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a business activity which you commenced a significant number of years ago. In the 20XX-XX financial year COVID-19 travel restrictions affected the profitability of your business activity. Your business was impacted in the following ways: • reduction in staff hours due to health concerns, and • unable to replace staff due to poor job market. Your business has previously produced a profit every year since commencement and the 20XX-XX financial year was the first financial year for you to incur a loss. You sold your business towards the end of 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) | Income Tax Assessment Act 1997 paragraph 35-55(1)(a)