Private ruling: Commissioner's discretion - Lead time
Date of advice: 4 November 2025
Published: 22 December 2025
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: DD MM 20XX

Ruling: Q1: Will the Commissioner exercise the discretion under paragraph 35-55(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include losses from your primary production business activity in calculating your taxable income for the 20XX-XX to 20XX-XX income years? | A1: Yes. Having regard to your full circumstances, it is accepted that it is the nature of the business activity that has prevented one of the four tests being passed. It is also accepted that you will pass one of the four tests within the commercially viable period for your industry. Consequently, the Commissioner will exercise his discretion in the 20XX-XX to 20XX-XX income years.

Relevant facts and circumstances: You satisfy the income requirement set out in subsection 35-10(2E) of the ITAA 1997 for the relevant income years. You carry on a macadamia farming activity on a parcel of land. In 20XX, you ordered some macadamia trees from a local nursery. After placing the order, the trees needed to be grafted. The grafted trees were originally scheduled to be planted around MM 20XX. However, during the 20XX calendar year, weather events including floods and significantly higher-than-average rainfall, impacted the supply of trees. The nursery had to deliver the trees at several batches over different years, and the total number of trees supplied was less than the ordered quantity. The wet conditions also caused access issues to paddocks, resulting in further delays to the original planting schedule. Consequently, the first planting did not occur until MM 20XX. The trees planted were already X years old at the time of planting on your farm. You have provided that macadamia trees take several years to begin producing nuts, with full maturity and maximum yield occurring around the X year. This lead time aligns with industry standards. You expect your business activity to generate at least $X in assessable income in the 20XX-XX income year, when the first batch of trees reach approximately X years of age.

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)