Private ruling: Non commercial losses and the exercise of the Commissioner's discretion due to special circumstances
Date of advice: 13 June 2019
Published: August 2019
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Will the Commissioner exercise the discretion to allow you to include any losses from your primary production business in the calculation of your taxable income for the 2017-18 financial year? | 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 carry on a farming and livestock primary production business which you and your spouse have operated for the last X years. You originally commenced the business in XXXX. The property on which you operate the business consists of approximately XXXX acres. Ongoing drought in your region in recent years has caused hardship. The prevailing drought conditions have impacted the amount of feed and crop production significantly which has resulted in increased cost of feed. As a result the XXXX are having to be sold in a poor condition and subsequently lower prices are being received. The increased costs of feed and water and reduced market prices has resulted in decreased profits. The primary production business has operated successfully in previous years and with increased rain and stock prices anticipated in the XXXX financial year you anticipate a return to profit. You do not satisfy the $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997 in relation to the 2017-18 income 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)