Private ruling: Non-commercial losses - Commissioner's discretion - special circumstances
Date of advice: 25 June 2020
Published: August 2020
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

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

Relevant facts and circumstances: You do not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997 (ITAA 1997). You carry on a primary production business in a partnership. The primary production business is operated on Property A and Property B. Property A was purchased in XXXX and Property B was purchased in XXXX. Property B was acquired to try and reduce the impacts the drought was having on the business; however, now both properties are in areas that are declared as drought affected. The drought has significantly affected the business activity and caused it to make a loss. You have provided information showing that, but for the drought, the business would have produced a tax profit and will make a tax profit in the year ended 30 June 2020.

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)