Private ruling: Commercial business losses
Date of advice: 21 May 2026
Published: 3 August 2026
Ruling period: 1 July XXXX to 30 June XXXX | 1 July XXXX to 30 June XXXX
Date scheme commenced: 1 July XXXX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 to allow you to include the loss from your livestock business activity in the calculation of yourtaxable income for the years ended 30 June 20XX and 30 June 20XX? | A1: Yes. The Commissioner will exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 to allow you to include the loss from your livestock business activity in the calculation of your taxable income from income years 1 July 20XX to 30 June 20XX.

Relevant facts and circumstances: 1. You conduct a livestock business on multiple parcels of land. 2. You commenced the business activity in partnership with Individual B in YYYY. This partnership was known as Business 1. 3. Business 1 went through a restructure to transition you to a sole trader as Individual B is retiring. 4. From DD MM YYYY, you began trading as a sole trader under Business 2 to support Individual B's retirement. 5. The restructure from Business 1 to Business 2 is occurring over a X year period allowing for stock to be transferred over a time that supports the winding down of operations while remaining commercial. 6. Business 1 will stop operating in YYYY. 7. The business employs a manager and historically had a number of casual and seasonal workers. 8. The area you operated in experienced unfavourable weather conditions including floods and droughts. 9. Due to the droughts, you needed to purchase large amounts of supplies for a quick recovery once the drought stopped. 10. There was minimal rainfall in YYYY which caused reduced stock numbers. 11. On DD MM YYYY, over X of livestock X. All remaining stock needed to be transported to other locations for agistment until the pastures are sown down and recover from the fire. 12. It is expected that a profit will be made in the YYYY income year once you have recouped livestock and restored the paddocks. 13. In the YYYY income year, your income for non-commercial loss purposes exceeded X. 14. In the YYYY income year, the business produced as assessable income of at least X. 15. The business produced a tax profit in at least X out of the past X years. 16. You use property worth at least X in conducting the business activity. 17. You use assets with a value of at least X in conducting the business activity.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 35 | Income Tax Assessment Act 1997 subsection 35-10 | Income Tax Assessment Act 1997 subsection 35-10(2E) | Income Tax Assessment Act 1997 subsection 35-10(4) | Income Tax Assessment Act 1997 section 35-30 | Income Tax Assessment Act 1997 section 35-35 | Income Tax Assessment Act 1997 section 35-40 | Income Tax Assessment Act 1997 section 35-45 | Income Tax Assessment Act 1997 paragraph 35-55(1)(a)