Private ruling: Non-commercial losses and the exercise of the Commissioner's discretion due to special circumstances
Date of advice: 4 August 2020
Published: September 2020
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion to allow you to include any losses from your primary production business in the calculation of your taxable income for the 20XX-XX financial year? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted that your business activity was affected by special circumstances outside your control which caused you to make a loss. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You carry on a primary production business which you and your partners have operated for the last xx years. You originally commenced the business in 20XX. Ongoing drought in recent years as well as diseases has caused a decrease in the stock numbers which has consequently affected your ability produce the level of income you have experienced previously. You continue to operate the property and focus on increasing the stock numbers to improve sales. The business has passed the assessable income test in prior years but your stock was particularly hard hit in the 20xx financial year. Due to improved rainfall this year the business is in the process of building up stock which will allow the business to recover and make improved profits. The business has operated successfully in previous years and with increased rain and increased stock numbers you anticipate a return to profit in the 20xx financial year. Having regard to your full circumstances. It is accepted that your business activity was affected by special circumstances outside your control and that these prevented you meeting one of the four tests.

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)