Private ruling: Non-commercial losses
Date of advice: 16 November 2017
Published: April 2018
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019 | Year ending 30 June 2020 | Year ending 30 June 2021
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 activity in your calculation of taxable income for the 2016-17 to 2020-21 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 2016-17 to 2020-21 financial years. For more information on non-commercial losses, please visit our website at ato.gov.au and search for quick code QC 33774.

Relevant facts and circumstances: Your income for non-commercial loss purposes for the financial year 2016-17 to 2020-21 is less than $250,000. You are carrying on a business which commenced in July 2015. The independent evidence you provided suggests that the commercially viable period for the activity is about seven years. You have provided your business plan and projected cash flow statement for the 2017-18 to 2027-28 financial years, which indicate that you will pass the $20,000 assessable income test in the 2021-22 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)