Private ruling: Non-commercial losses - Commissioner’s discretion – special circumstances
Date of advice: 15 November 2018
Published: February 2019
Ruling period: Financial year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in section 35-55 of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business in the calculation of your taxable income for the financial year ended 30 June 2018? | A1: Yes. It is accepted that your business activity was affected by special circumstances outside your control and that these circumstances prevented you from passing one of the four tests. You expect to pass one of the four tests in the financial year ended 30 June 20YY. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a business. You commenced business operations in the XXXX year. The business has passed the assessable income test in prior years. You submit that your business was affected by special circumstances, being extreme drought conditions. The drought has resulted in you being unable to pass one of the four tests. You expect to pass a test in the financial year ended 30 June 20YY.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 35-10(1) | Income Tax Assessment Act 1997 subsection 35-10(2A) | Income Tax Assessment Act 1997 subsection 35-10(2E) | Income Tax Assessment Act 1997 paragraph 35-55(1)(a)