Private ruling: Non-commercial losses - Commissioner's discretion - special circumstances
Date of advice: 14 January 2020
Published: March 2020
Ruling period: Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include your share of the losses from your primary productionbusiness activity in the calculation of your taxable income? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner will exercise the discretion. It is accepted that your business activity was affected by special circumstances outside your control which prevented it from satisfying 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 less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a primary production business activity in partnership. During the financial year ended 30 June 20XX the partnership business activity was severely impacted by drought conditions which resulted in it being unable to satisfy one of the four tests. The drought conditions have not improved in the area and the partnership business activity will not satisfy one of the four tests in the financial year ending 30 June 20XX. If the drought impacts reduce you expect the turnover to be similar to earlier years where the business activity satisfied 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(2) | Income Tax Assessment Act 1997 subsection 35-10(2E) | Income Tax Assessment Act 1997 paragraph 35-55(1)(a)