Private ruling: The Commissioner's discretion for lead time
Date of advice: 12 November 2019
Published: January 2020
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX | Year ending 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 20XX-XX to 20XX-XX financial years? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted the discretion. It is accepted there is a 'lead time' in the nature of your business activity and you will pass a test or make a tax profit within your industry's commercially viable period. 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 Income Tax Assessment Act 1997 . You commenced your business activity in July 20XX, which consists of farming primary production on a property on X hectares of land. You have approximately X primary production planted. You run the business in partnership with your spouse. You planted the primary production in July 20XX and you have provided that there is a lead time of three to four years for your industry. You intend to make $XX in assessable income and 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)(b)