Private ruling: Non-commercial business losses and the Commissioner's discretion
Date of advice: 6 February 2020
Published: March 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 primary production business in the calculation of your taxable income for the 2018-19 financial year financial? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted the 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: Your income for non-commercial loss purposes for the 20XX-XX financial year was less than $250,000. You carry on a primary production business activity (the activity) as a sole trader You have operated the activity for a number of years, and have passed the assessable income test since the 20XX-XX financial year. You submit that you were affected by drought in the 20XX-XX and 20XX-XX financial years, and as a result you had no natural feed left on your property to carry on your activity. Normally your region receives adequate spring to summer rain which produces natural pasture, and it is at this time you would purchase stock to then fatten and sell prior to the end of the financial year. Due to the drought, it was not feasible to purchase the amount of feed required to fatten the stock to the weights required for profitable sale, therefore you completely destocked the property during the 20XX-XX financial year. It is your intention to re-stock your property when the natural pasture has recovered to a sufficient level to again support livestock growth. When this is done you project that you will again pass the assessable income test.

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), and | Income Tax Assessment Act 1997 paragraph 35-55(1)(a).