Private ruling: Non-commercial losses - Commissioner's discretion - special circumstances
Date of advice: 18 December 2019
Published: March 2020
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

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 any losses from your primary productionbusiness activity in your calculation of 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 you from passing a test. 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 business of cattle fattening. Under normal seasonal conditions you would expect to trade between XX to XX steers each year. During the year the property was affected by drought conditions and this affected the number of steers able to be held. The impact of the ongoing severe drought conditions meant there was no forage crop for grazing purposes. Forage that was planted failed due to insufficient moisture. It has not been possible to plant permanent pasture for the same reason. You purchased XX head of steers in XXX XX and supplementary fed them with hope that the drought conditions would not worsen further. However the steers had to be sold and were not replaced as the drought conditions did worsen. You expect to meet the assessable income test or produce a tax profit each year once conditions return to normal.

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)