Private ruling: Non-commercial losses - Commissioner's discretion - special circumstances
Date of advice: 11 March 2020
Published: April 2020
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

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 primary productionbusiness activity in your calculation of taxable income? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner will exercise the 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 do not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a primary production business in a partnership. There is currently a severe drought in your area which has severely affected the business activity. This has caused the business activity to result in an overall loss for the 20XX-XX financial year. You have provided projected profit and loss statements for the 20XX-XX, 20XX-XX and 20XX-XX financial years indicating that the business activity will continue to make a loss. Your projected profit and loss statements show that the business will be profitable in the 20XX-XX financial year.

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)