Private ruling: Non-commercial business losses and the Commissioner's discretion
Date of advice: 5 June 2019
Published: July 2019
Ruling period: Financial year ending 30 June 2019 | Financial year ending 30 June 2020 | Financial year ending 30 June 2021 | Financial year ending 30 June 2022 | Financial year ending 30 June 2023
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the Commissioner exercise his discretion to allow you to include any losses from your primary production activity in the calculation of your taxable income for the 2018-19 to 2022-23 financial years? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted there is a 'lead time' in the nature of your business activity and you will pass a test 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 less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997 . During the 2018-19 financial year you commenced a primary production activity (the activity). During the 2018-19 you ordered X trees from a nursery to commence the activity. The trees will be delivered when they are one year old and will be planted during the 2019-20 financial year. You have provided evidence that indicates that the first commercial harvest should be expected after approximately 5 years. You expect the activity to earn more than $20,000 in assessable income in the 2023-24 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)