Private ruling: Non-commercial business losses and the Commissioner's discretion - special circumstances
Date of advice: 7 July 2021
Published: September 2021
Ruling period: Income year ended 30 June 202X
Date scheme commenced: 1 July 202X

Ruling: Q2: Yes. Having regard to your full circumstances, the Commissioner has granted his discretion as it is accepted that your business activity was affected by special circumstances outside your control which prevented your business activity from commencing in the income year ended 30 June 202X, resulting in you failing to satisfy one of the tests. Restrictions imposed by government in response to the COVID-19 pandemic prevented you from commencing business. Your projected budget indicates you would have passed the assessable income test should your business have proceeded. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You satisfy the $250,000 income requirement set out in subsection 35-10(2E) of the ITAA1997. During the income year ended 30 June 202X you intended on commencing a business activity. You applied for and received an ABN and registered a business name as a sole trader. You spent approximately $xx on the activity to date. You had completed courses and had one course to complete - you'd completed the theory and just needed a practical component signed off when the COVID pandemic occurred. You had set up supplier accounts and bought product to use in the activity. You arranged signage and safety and acquired an EFTPOS system. You were in process of finalising council permits when COVID hit. You provided a projected budget, prepared with the assistance of your accountant) which indicated turnover and profit exceeding $20,000 per year. You have since gained employment and do not intend to continue the business since still COVID impacting tourism.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 35-10 | Income Tax Assessment Act 1997 section 35-55(2)


Question: Will the Commissioner exercise his discretion in subsection35-55(2) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business activity in the calculation of your taxable income for the income year ended 30 June 202X? | This ruling applies for the following period: