Private ruling: Non-commercial losses
Date of advice: 26 April 2018
Published: July 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business activity in your calculation of taxable income for the 2016-17 financial year? | A1: Yes Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control. It is also accepted that, but for the special circumstances, you would have made a tax profit, and you have met, or would have met one of the four tests. Consequently the Commissioner will exercise his discretion in the 2016-17 financial year. For more information on non-commercial losses, please visit our website at https://www.ato.gov.au/Business/Non-commercial-losses/ , or search quick code QC 33774 at www.ato.gov.au .

Relevant facts and circumstances: Your income for non-commercial loss purposes for the 2015-16 and 2016-17 financial years was less than $250,000. You are carrying on a business (the activity) which commenced in MMM YYYY You submit that you were affected by special circumstances in the 2016-17 financial year. You developed a medic al condition resulting in you operating the business in a limited and reduced capacity. This reduced workload resulted in you making a net loss. You had one employee who was unable to complete a majority of tasks without supervision from you due to his inexperience and lack of qualification. The business was profitable in the two years prior.

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)