Private ruling: Non-commercial losses and the exercise of the Commissioner's discretion due to special circumstances
Date of advice: 7 August 2020
Published: September 2020
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion to allow you to include any losses from your [XXXX] business in the calculation of your taxable income for the [20YY-YY] financial [year/years]? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted that your business activity was affected by special circumstances outside your control which prevented you from passing a test. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You carry on a primary production business which you and your partner have operated for the last xx years. You originally commenced the business in 20XX. The business is a mixed farming business. The farm is operated as a partnership by yourself and your spouse. Shortly after purchasing the property you commenced selling your produce. On xx xxx xxxx the farm was devasted by an extreme weather event which caused over $xxx worth of property damage. This resulted in no produce for the expected harvest. You continued to operate the business and focused on initial recovery and clean up after the weather event. Whilst you were out on the property undertaking repairs you injured yourself After a stay in the hospital you returned to the farm but were limited in your ability to maintain the farm for the remaining financial year. It is anticipated the business will produce a profit in the 20xx financial year. 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 meeting one of the four tests.

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)