Private ruling: Non-commercial losses
Date of advice: 13 March 2018
Published: June 2018
Ruling period: Year ended 30 June 2016 | Year ended 30 June 2017
Date scheme commenced: 1 July 2015

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 business activity in your calculation of taxable income for the 2015-16 and 2016-17 financial years? | A1: Yes Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control. It is also accepted that, but for the special circumstances, you would have made a tax profit, and you have met, or would have met one of the four tests. Consequently the Commissioner will exercise his discretion in the 2015-16 and 2016-17 financial years. For more information on non-commercial losses, please visit our website at https://www.ato.gov.au/Business/Non-commercial-losses/ , or search quick code QC 33774 at www.ato.gov.au .

Relevant facts and circumstances: Your income for non-commercial loss purposes for the 2015-16 and 2016-17 financial years is less than $250,000. You are carrying on a business (the activity) which commenced in 2016. You submit that you were affected by special circumstances in the 2015-16 and 2016-17 financial years. Your spouse who manages the business suffers from an illness. Your spouse persevered with continuing to open the business, however due to pain and constant medical appointments it was difficult to have the business open on a continuous and frequent manner. The business could not operate adequately due to your spouse’s illness. You attempted to recruit additional staff but it was not commercially viable. With the stress of the business and its inability to operate to full capacity you made the decision to close the business. The business ceased in 2017.

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)