Private ruling: Non-commercial losses and the Commissioner’s discretion for lead time
Date of advice: 17 December 2018
Published: April 2019
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 January 2017

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 2016-17 financial year? | 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 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 do not satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a primary production business. You commenced business operations part way through the 2016-17 financial year. The harvest of the crops takes place in November/December and income is only received after the delivery of the grain occurs. As the business commenced in the second half of the 2016-17 financial year, the business did not produce a profit in that financial year due to the timing of the harvest. The business has produced a profit in the 2017-18 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)(c)