Private ruling: Commissioners discretion - non-commercial losses - special circumstances
Date of advice: 20 July 2022
Published: November 2022
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: XX April 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in section 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 the calculation of your taxable income for the 20XX and 20XX income years? | A1: Yes. Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control and these prevented you from meeting one of the four tests. Consequently, the Commissioner will exercise his discretion in the 20XX and 20XX income years.

Relevant facts and circumstances: You carry on a business in a border community region. You reside in City A with your business premises being located in City B at the time that COVID-19 commenced. You vacated your business premises in City B around a specified date. You satisfy the under $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You did not satisfy one of the four tests set out in subparagraph 35-55(1)(b)(i) of the ITAA 1997. You did not satisfy the under $40,000 non-professional arts assessable income set out in subsection 35-10(4) of the ITAA 1997. You have not made a tax profit since you commenced business. You provided us with your assessable income amount for the 20XX and 20XX income years. You provided us with the amount of your tax losses for the 20XX and 20XX income years. In the 20XX and 20XX income years your business was affected by COVID-19. Your business was impacted in the following ways: • Clients either postponed or cancelled their booking with you. • Lockdowns and other restrictions have limited or prevented people from proceeding with their booking, which reduced the demand for your services. • You were prevented from accessing your business premises due to the state government-imposed border bubble.

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 subsection 35-10(4) | Income Tax Assessment Act 1997 paragraph 35-55(1)(a) | Income Tax Assessment Act 1997 subparagraph 35-55(1)(b)(i)