Private ruling: Non-commercial losses and the exercise of the Commissioner's discretion
Date of advice: 5 July 2019
Published: September 2019
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 01 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your farm contracting business in the calculation of your taxable income for the 20XX-XX financial year? | 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 caused you to make a loss. 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 <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997 for the 20XX financial year. You received a single lump sum payment in the 20XX financial year Your business activity is primary production related activities. You commenced the business activity on X July 20XX. You service the A and B state border area, as your business is based in a nearby city. The farming community you service has been affected by drought for several years. The farming communities you service have been affected by drought for the last several years, including the 20XX-XX financial year. Due to the drought, you have had limited business opportunities. In the 20XX-XX financial year, you met the assessable income and other assets test. You have provided an estimated profit and loss statement which shows that but for the special circumstances, the business activity would have made a tax profit in the 20XX-XX 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)(a)