Private ruling: Non-commercial losses-Lead time
Date of advice: 30 August 2019
Published: October 2019
Ruling period: Year ending 30 June 20XX
Date scheme commenced: X June 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(c) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your primary production activity in your calculation of taxable income for the 20XX-XX financial year? | A1: Yes Having regard to your full circumstances, it is accepted that it is in the nature of the business activity that has prevented you making a tax profit. It is also accepted that you will make a tax profit within the commercially viable period for your industry. Consequently the Commissioner will exercise his discretion in the 20XX-XX financial year. For more information on non-commercial losses, please visit our website at ato.gov.au and search for quick code QC 33774.

Relevant facts and circumstances: Your income for non-commercial loss purposes for the financial years 20XX-XX is more than $250,000. You are carrying on a business (the activity) which commenced on X June 20XX. In April 20XX you had purchased equipment necessary to commence your activity once a suitable site was located. The business name was registered on XX May 20XX. In early June 20XX you located the necessary site from which to operate your activity. Following a verbal agreement you took procession of the site from XX June 20XX. (You have provided a copy of the rental receipt deposit). You purchased supplies and stock prior to XX June Due to it being so late in the financial year and not having commenced marketing and no sales were made prior to 30 June 20XX. Sales have been made in July 20XX. The first year of the business will make a profit is the 20XX-XX financial year

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)(c)