Private ruling: Non-commercial losses - Commissioner's discretion - lead time
Date of advice: 19 September 2019
Published: November 2019
Ruling period: Year ended 30 June 20XX to year ending 30 June 20XX
Date scheme commenced: 1 January 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business activity in your calculation of taxable income for the income years ended 30 June 20XX to 20XX? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted the discretion. It is accepted there is a 'lead time' in the nature of your business activity and you will pass a test or make a tax profit within your industry's commercially viable period. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You purchased a property. You undertook research to determine the best business to conduct. You established that there was a wholesale market through an established producer and exporter in the area. You developed a business plan and have made forecasts of income and expenses to show when the business will be profitable Your business plan has been updated to account for additional costs and to be more realistic in updating the establishment costs and forecast cost and expenses in conducting the business to gain a commercial return. You have forecast that you will have income of $X and make a tax profit in the xxxx/xxxx income year. You are continuing to source ongoing advice from established businesses in the area and other professional persons involved in the industry. You have previously been granted a favourable private ruling for lead time for the income years ended 30 June 20XX to 30 June 20XX. You have provided independent evidence that attests to a lead time of X years for your industry.

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)(b)