Private ruling: Non-commercial losses and the Commissioner’s discretion
Date of advice: 13 June 2018
Published: August 2018
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business in your calculation of taxable income? | A1: Yes Having regard to your full circumstances, it is accepted that it is the nature of the business activity that has prevented you from 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.

Relevant facts and circumstances: You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You are carrying on a business activity. Upon the commencement of your business you have completed the required initial preparation activities, which is in line with the industry recommendations for the business activity. You commenced business operations in the 20XX-XX financial year. You have provided independent evidence that confirms the accepted number of years before your type of business activity becomes commercially viable. You project to meet the assessable income test 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) | Income Tax Assessment Act 1997 paragraph 35-55(1)(b)