Private ruling: Non-commercial loss - lead time >$250,000
Date of advice: 29 August 2025
Published: 27 October 2025
Ruling period: 1 July 20XX to 30 June 20XX | 1 July 20XX to 30 June 20XX | 1 July 20XX to 30 June 20XX | 1 July 20XX to 30 June 20XX | 1 July 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(c) of the Income Tax Assessment Act 1997 to allow you to include any losses from your business in the calculation of your taxable income for the 20XX to the 20XX income years? | A1: Yes.

Relevant facts and circumstances: 1. You commenced the business on DD MM YYYY. 2. The business is operated in partnership with another individual. 3. You established the business activity on properties you purchased in 20XX and 20XX. 4. You employ a number of different staff to perform different duties. 5. From 20XX to 20XX, you have introduced and sold a number of different products. 6. Your products have won several awards. Making you well placed to expand production. 7. The nature of the business activity means that a number of years will pass between commencing the business activity and producing the product. 8. You stated that in your industry, 11-13 years is the accepted number of years before an activity becomes commercially viable. 9. Production has grown from XXX in 20XX to XXX in 20XX. Full production capacity (XXX) is anticipated within XXX years, positioning the business for sustained profitability. 10. You have prepared a Business Plan for the business. 11. As per your business plan, it is projected that production will increase by 20XX. 12. Poor weather conditions from 20XX to 20XX caused dramatically decreased yields. This slowed your business' expansion. 13. In 20XX, you are expected to earn $XXX in revenue. 14. You are expected to make a profit on each product unit ranging from $XXX to $XXX. 15. As production has increased since 20XX, products will become saleable from 20XX. 16. Based on increased production and subsequent increased sales (taking into account the 3-4 year lead time to sales), it is predicted that the business will be profitable by 20XX. This is within the industry standard. 17. You sought Commissioners discretion in the 20XX financial year based on lead time. Discretion was granted on DD MM YYYY and covered financial years from 20XX to 20XX. 18. Your income for non-commercial loss purposes in the 20XX income year (the income year prior to the income year this application was received by the Commissioner) is $250,000 or more.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 35 | Income Tax Assessment Act 1997 subsection 35-10(1) | Income Tax Assessment Act 1997 subparagraph 35-10(1)(a)(i) | Income Tax Assessment Act 1997 subparagraph 35-10(1)(a)(ii) | Income Tax Assessment Act 1997 subparagraph 35-10(1)(a)(iii) | Income Tax Assessment Act 1997 subparagraph 35-10(1)(a)(iv) | Income Tax Assessment Act 1997 subsection 35-10(2) | Income Tax Assessment Act 1997 subsection 35-10(2E) | Income Tax Assessment Act 1997 subsection 35-10(4) | Income Tax Assessment Act 1997 section 35-55 | Income Tax Assessment Act 1997 paragraph 35-55(1)(c)