Private ruling: Commissioner's discretion for non-commercial losses
Date of advice: 13 November 2019
Published: February 2020
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

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 for the 2016-17 financial year? | A1: Yes Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control. Consequently the Commissioner will exercise his discretion to extend the lead time to 30 June 2019. 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 <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a primary production business, comprised of two business activities being a mixed farming activity, which commenced at the same time on 1 July 20XX. You initially purchased livestock that were pregnancy tested at a very young age in the second half of the relevant financial year. You submit that you were affected by special circumstances in the 2018-19 financial year. You have not submitted any evidence to substantiate your claim, as at the time you suffered major losses of livestock due to wild animal attacks, and the only action needed was to phone a local contractor who set traps to remedy the situation. You submit that the special circumstances impacted on the profitability of your business in the following ways: · You initially projected a profit for the 2018-19 financial year in your initial business plan. · Your business was heading towards the projected profit figure, however in Spring 20YY your property came under sustained wild animal attacks. · In Spring 20YY, after suffering major losses of livestock as a result of the wild animal attacks, you decided to cease operating the affected business activity, with a large number of that particular livestock being sent to market. · Your sole focus from that point onwards was the remaining activity / side of the business. · Had it not been for the wild animal attacks you would have returned a profit in the 2018-19 financial year. You intend to return to profit in the 2019-20 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)