Private ruling: Commissioner's discretion - non-commercial losses
Date of advice: 20 August 2021
Published: February 2022
Ruling period: 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 any losses from your business activity in your calculation of taxable income for the 20XX-XX financial year? | A1: Yes. Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control and that these prevented you meeting one of the four tests. Consequently, the Commissioner will exercise his discretion in the 20XX-XX financial year.

Relevant facts and circumstances: You satisfy the under $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a clothing business where you design and sell children's clothing with the manufacturing outsourced. You commenced business operations in the 20XX-XX financial year and had high initial costs including: • Business Registration • Website Development and Hosting • Editorial and E-commerce Photography • IT Hardware • Office Supplies • Stock. In the 20XX-XX financial years Covid-19 impacted your business activity by causing delays in the manufacturing of the items which saw the launch date being delayed by several months. You were therefore unable to meet the assessable income test and incurred losses. You intend to make a profit and meet the assessable income test 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)


This ruling applies for the following period: