Private ruling: Non-commercial business losses
Date of advice: 28 September 2020
Published: November 2020
Ruling period: Financial year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise his discretion to allow you to include any losses from your event hosting business in the calculation of your taxable income for the 20XX-XX 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 less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997 . You commenced an events business in the 20XX-XX financial year prior to COVID-19 Government restrictions being implemented. Soon after commencement you organised a series of events that were advertised on your website and several other digital platforms, with locations booked, facilitators engaged and some tickets sold. You submit that you were affected by special circumstances in the 20XX-XX financial year, being COVID-19 Government operating restrictions, which forced you to cancel the series of events. Whilst the Government restrictions have eased, the operating environment has changed since your business commenced and people are still not comfortable with participating in events with the threat of COVID-19 present. You have provided detailed projected profit and loss statements which show the series of events planned with their expected attendance levels. The projections show sales totalling more than $XXX would have been achieved had you traded for a full 12 months after commencement without the Government restrictions being imposed.

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)