Private ruling: The Commissioner’s discretion for non-commercial losses.
Date of advice: 29 November 2018
Published: March 2019
Ruling period: Year ended 30 June 2018.
Date scheme commenced: 1 July 2017 .

Ruling: Q1: Will the Commissioner exercise the discretion under section 35-55 of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your cafe business in the calculation of your taxable income for the financial year ended 30 June 20YY? | A1: Yes . It is accepted that your business activity was affected by special circumstances outside your control and that these circumstances prevented you meeting one of the four tests. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carried on a small business, which commenced a few years ago. You operated as a partnership. The partnership had passed the assessable income test in prior years. You submit that you were affected by special circumstances in the financial year ended 30 June 20YY. The current landlord of the building closed the doors on the business without giving you the option of renewing the lease as per the agreement. They transferred all the stock, plant and equipment which was bought under contract, over to the new operator. This has resulted in you being unable to pass one of the four tests.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 35-10(1) | Income Tax Assessment Act 1997 subsection 35-10(2A) | Income Tax Assessment Act 1997 subsection 35-10(2E) | Income Tax Assessment Act 1997 section 35-30 | Income Tax Assessment Act 1997 paragraph 35-55(1)(a)