Private ruling: Non-commercial losses / special circumstances
Date of advice: 16 December 2021
Published: March 2022
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise 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 primary production business activity in your calculation of taxable income for the 20XX-XX and 20XX-XX financial years? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner has granted discretion. It is accepted that there are special circumstances which will prevent your business activity from making a tax profit in the 20XX-XX and 20XX-XX financial years. Further information on non-commercial losses can be found by searching QC 33774 on ato.gov.au.

Relevant facts and circumstances: You commenced a primary production activity through a family partnership (the Partnership). The Partnership is expected to make a loss in the 20XX-XX and 20XX-XX financial years due to a mice plague and significant rainfall in the region. You estimate that you will not satisfy the less than $250,000 income amount set out in subsection 35-10(2E) of the ITAA 1997 for the 20XX-XX and 20XX-XX financial years. The Partnership expects to make a profit in the 20XX-XX financial year.

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 section 35-55 | Income Tax Assessment Act 1997 paragraph 35-55(1)(a)