Private ruling: Non-commercial business losses and the Commissioner’s discretion
Date of advice: 24 January 2019
Published: May 2019
Ruling period: Financial year ending 30 June 2017 | Financial year ending 30 June 2018
Date scheme commenced: 1 July 2016

Ruling: Q1: Will the Commissioner exercise his discretion to allow you to include any losses from your cattle fattening business in the calculation of your taxable income for the 2016-17 and 2017-18 financial years? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted there is a 'lead time' in the nature of your business activity and you will pass a test or 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 satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997 . You purchased a property on which to operate the cattle fattening business (the activity) in the relevant financial year. You began the activity by purchased a number of young weaner steers during the relevant financial year, and will run a total of approximately XX head on your property. You had planned to fatten the cattle over a period of approximately 12 months, however after the 12 month period you were advised by a potential buyer for the abattoir that you should wait until the cattle had put on more weight. As such the cattle were not sold in the relevant financial year and no income was derived. The activity incurred losses for the relevant and subsequent financial years, however the cattle will be sold in the 2018-19 financial year resultin g in income of more than $20,000.

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)(b).