Private ruling: Non-commercial losses - Commissioner's discretion
Date of advice: 1 June 2020
Published: July 2020
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX

Ruling: Q1: Will the Commissioner exercise his discretion to allow you to include any losses from your primary productionbusiness activity in the calculation of your taxable income for the 20XX-XX and 20XX-XX financial years? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner will exercise his discretion. It is accepted that there is a 'lead time' in the nature of your activity and it will make a tax profit within the commercially viable period for the industry concerned. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

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. On DD/MM/YYY you began to carry on a primary production business. There is a lead time for the business activity between the commencement of the business activity and the activity producing assessable income. The business activity made a loss for the 20XX-XX financial year (its first year of operation). It is expected that a loss will be made in the second year of operation. You have provided a profit and loss statement projecting that the activity will be profitable in the 20XX-XX financial year (the third year of operation).

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)(c)