Private ruling: Non-commercial losses and the Commissioner’s discretion for special circumstances
Date of advice: 11 June 2018
Published: August 2018
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business activity in your calculation of taxable income for the 20XX to 20XX financial years? | A1: Yes. Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control. It is also accepted that, but for the special circumstances, you would have made a tax profit, and you have met, or would have met one of the four tests. Consequently the Commissioner will exercise his discretion in the 20XX and 20XX financial years.

Relevant facts and circumstances: You do not satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a business activity, which commenced in the 20XX financial year. You were affected by special circumstances in the 20XX and 20XX financial years being that you were diagnosed with a medical condition that prevented you from working in the business activity. After the diagnosis of the medical condition, you were unable to perform duties in your business activity for a period of time. At the conclusion of this time, your medical condition meant that you were unable to return to work. You will cease the business activity on 30 June 20XX.

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)