Private ruling: Non-commercial loss - lead time >$250,000
Date of advice: 7 January 2026
Published: 2 March 2026
Ruling period: 1 July YYYY to 30 June YYYY | 1 July YYYY to 30 June YYYY | 1 July YYYY to 30 June YYYY | 1 July YYYY to 30 June YYYY
Date scheme commenced: 1 July YYYY

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(c) of the Income Tax Assessment Act 1997 to allow you to include any losses from your business activity in the calculation of your taxable income for the YYYY to the YYYY income years? | A1: Yes.

Relevant facts and circumstances: 1. You commenced the business activity on DD MM YYYY. 2. The business is operated in partnership. 3. You carry out the business on a large property (Property). 4. You plan to install a combination of improved infrastructure and systems. 5. You stated that your business activity requires X years to become commercially viable. 6. It is anticipated that you will reach sustainable capacity to support the business activity by the end of year X to reach a tax profit within the first X years of the business. It is also anticipated that by the middle of year X you will complete essential upgrades. 7. You obtained a consultation report on the commercial viability and production of the business activity. 8. You have prepared a Business Plan for the business activity (Business Plan). 9. Predicted expenditure is related to costs of running the business activity and necessary improvements 10. In YYYY, you are expected to earn $XXX in revenue. 11. You are expected to first make a net profit of $XXX in YYYY. 12. As production increases, it is expected that sales will increase from $XXX in YYYY to $XXX in YYYY. 13. At the end of year X, you plan on focussing on efficiency, market timing and cost control to continue profitability. 14. Based on increased production and subsequent increased sales (taking into account the X-year lead time to sales), it is predicted that the business will be profitable by YYYY. This is within the industry standard and expected timeframe for the business activity. 15. Your income for non-commercial loss purposes in the YYYY income year (the income year prior to the income year this application was received by the Commissioner) is $250,000 or more.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 35 | Income Tax Assessment Act 1997 subsection 35-10(1) | Income Tax Assessment Act 1997 subparagraph 35-10(1)(a)(i) | Income Tax Assessment Act 1997 subparagraph 35-10(1)(a)(ii) | Income Tax Assessment Act 1997 subparagraph 35-10(1)(a)(iii) | Income Tax Assessment Act 1997 subparagraph 35-10(1)(a)(iv) | Income Tax Assessment Act 1997 subsection 35-10(2) | Income Tax Assessment Act 1997 subsection 35-10(2E) | Income Tax Assessment Act 1997 subsection 35-10(4) | Income Tax Assessment Act 1997 section 35-55 | Income Tax Assessment Act 1997 paragraph 35-55(1)(c)