Private ruling: Non-commercial losses and the Commissioner’s discretion
Date of advice: 22 May 2018
Published: July 2018
Ruling period: Year ended 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 your business activity that has prevented you from making a profit. It is also accepted that you will make a profit within the commercially viable period for your industry. Consequently the Commissioner will exercise his discretion in the 20XX-XX and 20XX-XX financial years.

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 which commenced in 20XX. Upon the commencement of the business you did minor preparations while waiting for the industry standard time period to plant your crops. It is normal practice that when following the industry recommended commencement activities, the business should be commercially viable within 18 months. You will be doing the majority of the required tasks in the business outside of normal working hours, and you will be contracting in labour to undertake specific tasks when required. You have provided independent evidence that attests to a lead time of three years for your industry. You project to make $20,000 in assessable income in the 2018-19 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)