Private ruling: The Commissioner’s discretion for non-commercial losses
Date of advice: 16 November 2018
Published: February 2019
Ruling period: Year ended 30 June 20XX | 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 business in the calculation of your taxable income for the 20XX and 20XX financial years? | 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 do not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997 . You carry on a business. Your business activity commenced operations in the 19XX financial year. You submit that you were affected by special circumstances in the 20XX and 20XX financial years. A Rainfall Deficiency Report issued by the Australian Bureau of Meteorology shows that the area is currently subject to a rainfall deficiency. As a result of the low rainfall, the condition of your livestock has worsened, resulting in a lower than normal sale price. You are reducing carrying numbers on the property as a result of the drought. The crops for your business activity would ordinarily be planted between X and Y of a given year, for harvest the following year. The crops due for harvest in the 20XX year failed due to the low rainfall. No crops were able to be planted for the 20XX financial year harvest as the conditions were too poor as a result of the drought. You expect to be able to plant in the 20XX financial year for harvest in 20XX. You expect to have more feed available for livestock in the 20XX financial year, which will improve their condition and increase sale prices. You expect to return to tax profit in the 20XX 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)