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? Answer 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 hat manufacturing business for special occasions. You commenced business operations several years ago. In the 20XX-XX financial year Covid-19 impacted your business activity in the following ways: • Greatly reduced demand for due to closures and cancellations which led to a loss in your business income. • You did not meet the assessable income test due to the significant reduced gross income. • Your business has previously been profitable and met the assessable income test. • You intend to make a profit 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: