Private ruling: Non-commercial losses
Published: June 2012
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Will Division 35 of the Income Tax Assessment Act 1997 (ITAA 1997) apply to losses you incur in relation to the disposal of software when you are not carrying on a business? | A1: No.

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You developed some software. You disposed of the software at a loss. You are not carrying on a business of software development.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 35

Reasons for decision: Summary: Taxation Ruling TR 2001/14 supports the view that the provisions of Division 35 of the ITAA 1997 will only apply if you have a net loss from a business activity you carry on. The non-commercial loss rules determine whether a taxpayer can use business losses to offset income from other sources or whether they have to be quarantined. If you are not carrying on a business, you will have no business loss to which the non-commercial loss rules could potentially apply.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.