Private ruling: Non-commercial losses and the Commissioner’s discretion for lead time.
Date of advice: 21 November 2018
Published: February 2019
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 XXXXXX 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in section 35-55 of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your plantation business activity (the activity) in the calculation of your taxable income for the 20XX-XX to 20XX-XX financial years? | A1: Yes. Having regard to your full circumstances, the Commissioner has granted his discretion as it is accepted there is a 'lead time' in the nature of your business activity and you will make a tax profit within your industry's commercially viable period. 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 own a farming business which commenced on XX/XX/20XX. The farm consists of around XXX trees between the ages of XX and XX years of age. You provided a letter from an independent third party stating that trees of your type are at full production in the XX to XX year. The 20XX-XX financial year will be the XX year of operation for the activity. The business activity will produce a profit in the 20XX-XX 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), and | Income Tax Assessment Act 1997 paragraph 35-55(1)(c).