Private ruling: Non-commercial losses
Date of advice: 1 June 2022
Published: August 2022
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 2020

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to not apply the rule in subsection 35-10(2) of the ITAA 1997 to your business activity for the relevant income year? | A1: Yes.

Relevant facts and circumstances: You conduct a business which has been operating for a few years. Your business made a profit in a number of years. You have had a history of involvement in the same or similar business through your family, which has been involved in these or similar operations since the 19XXs. In the relevant income year, you satisfy one or more of the tests listed in subparagraphs 35-10(1)(a)(i) to (iv) of the ITAA 1997. However, you do not satisfy the requirement set out in subsection 35-10(2E) of the ITAA 1997. In the relevant income year, COVID impacted your business activity in a number of ways and caused your business to make a loss. You are projected to make a profit in future income years.

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)

Reasons for decision: Summary: Having had regard to your full circumstances, it is accepted that special circumstances are outside your control which significantly affected your business operations during the relevant income year. As such, and further having taken into consideration all the facts and circumstances in your case, the Commissioner exercises the discretion in paragraph 35-55(1)(a) of ITAA 1997 to not apply the rule in subsection 35-10(2) of the ITAA 1997 to your business activity for the income year ended 30 June 20XX.