Private ruling: The Commissioner's discretion for non-commercial losses
Date of advice: 9 August 2019
Published: October 2019
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the Commissioner exercise the discretion to allow you to include any losses from your cattle fattening business in the calculation of your taxable income for the 2018-19 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 prevented you from passing a test. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997 for the 2018-19 financial year. You carry on a business of cattle fattening on a XXX acre property. You commenced business operations in the 2017-18financial year. You had intended to make your first sales, and expected that the business would make a tax profit, in the 2018-19financial year. However, your property was impacted by a major weather event during the 2018-19financial year which prevented the grazing and fattening of your cattle and they did not progress to weights needed for sale. Also, you suffered a major medical episode during the 2018-19 financial year and you required several months to recover which limited your ability to work on the property. You will make your first sales during the 2019-20financial year. From the sales proceeds you will continue to purchase cattle and make further improvements to the property.

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)