Private ruling: Non-commercial business losses and the Commissioner's discretion
Date of advice: 20 May 2020
Published: July 2020
Ruling period: Financial year ended 30 June 20XX
Date scheme commenced: 1 June 20XX

Ruling: Q1: Will the Commissioner exercise his discretion to allow you to include any losses from your primary production business in the calculation of your taxable income for the 20XX-XX financial year? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner will exercise his discretion. It is accepted that your business activity was affected by special circumstances outside your control which caused you to make a loss. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You do not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997 . You carry on a primary production business (the business) in partnership. You commenced business operations a number of years ago. The Commissioner exercised his discretion to allow your business losses in the 20XX-XX financial year as it was affected by special circumstances. You have again requested the Commissioner's discretion for the 20XX-XX financial year, as you contend that the business continued to be affected by the special circumstances experienced in the 20XX-XX financial year. You have provided a projected profit and loss statement showing had the special circumstances not occurred in the 20XX-XX financial year and continued to affect the 20XX-XX financial year, the business would have shown a profit. The ability for the business to regenerate the value of its stock, and in time turn over a tax profit is proving to be a slow process; however, the business is expected to be profitable in 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)(a)