Private ruling: Non-commercial Losses - Special Circumstances - Drought
Date of advice: 11 December 2019
Published: February 2020
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the Commissioner exercise the discretion to allow you to include any losses from your business in the calculation of your taxable income for the 2018-19 financial year? | 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: You satisfy the $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997 . You operate a primary production business activity which commenced in 199X. You grow crops. Previously, approximately X hectares of the land are used in the business to produce the crops. Planting commences in X with the harvest occurring once a year. You have been impacted by a significant reduction in rainfall from January 2018 to May 2018. June 2018 saw the soil moisture to be non-existent and weed germination poor. Therefore the X hectares were not able to sown due to the drought conditions; as a result the annual harvest in December 2018 did not occur which resulted in no harvest occurring in the 2018-19 financial year. The region was listed as a drought affected council in October 2018. Historically you have met the requirements of 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) | Income Tax Assessment Act 1997 paragraph 35-55(1)(a)