Private ruling: Commissioner's discretion - non-commercial losses
Date of advice: 10 July 2024
Published: 19 August 2024
Ruling period: Year ended 30 June 2024
Date scheme commenced: 1 July 2023

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) 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 2023-24 financial year? | A1: Yes. Having regard to your full circumstances, it is accepted that "because of its nature" your business activity has not or will not satisfy meeting one of the four tests but will do so in a commercially viable time. Consequently, the Commissioner will exercise his discretion in the 2023-24 financial year to allow you to include any losses from your business activity in the calculation of your taxable income.

Relevant facts and circumstances: You satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. The business was started in 20XX. When the business was first started trees were germinated and came to delivery size at a supply orchard and planted in the middle of 20XX and the grafting process occurring early 20XX. Currently the trees are X years old and have produced their first crop in 20XX. Producing a very light crop with not all trees producing and the quantity of the crop was not sufficient to warrant the harvest and processing costs. You will meet one of the four tests within the commercially viable period for your industry.

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)