Private ruling: Non-commercial losses
Date of advice: 30 October 2024
Published: 9 December 2024
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 to allow you to include losses from your primary production business activity in the calculation of your taxable income for the income year ended 30 June 20xx? | A1: Yes. This private ruling applies for the following period: Income tax year ended 30 June 20xx The scheme commenced on: 1 July 2020

Relevant facts and circumstances: Business A is a primary production business (the Business). Until ddmmyyyy, the Business was carried on in partnership (Partnership). From ddmmyyyy to ddmmyyyy, the partners in the Partnership were You, and Individual B. Individual B passed away on ddmmyyyy and their legal representative acted in their place as partner during the administration of their estate until ddmmyyyy. A Partnership income tax return was lodged for the period ddmmyyyy to ddmmyyyy, which reported total net income from the activities of the Business of $X, all of which was distributed to you. On ddmmyyyy, you acquired Individual B's interest in the Partnership. The acquisition was delayed until this time due to complications finalising the administration of Individual B's estate. From this time, you carried on the Business as a sole trader. You did not earn any income from the Business activities between ddmmyyyy and ddmmyyyy. You acquired a large amount of plant and equipment from the partnership and, from ddmmyyyy, you continued using the plant and equipment in the Business activities. You claimed temporary full expensing deductions in respect of the plant and equipment. Your income for non-commercial loss purposes was $250,000 or more. You recorded a profit of $X from the Business activities for the income year ended 30 June 20xx.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 35 | 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 subsection 35-10(4) | Income Tax Assessment Act 1997 section 35-55 | Income Tax Assessment Act 1997 paragraph 35-55(1)(c)