Private ruling: Commissioner's discretion for non-commercial losses
Date of advice: 15 February 2024
Published: 2 April 2024
Ruling period: Year ending 30 June 2023
Date scheme commenced: 1 July 2022

Ruling: Q1: Will the Commissioner exercise the discretion to allow you to include any losses from your business in the calculation of your taxable income for the 2022-23 financial year? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted 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 $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a primary production business, which commenced in your name in the 2019-20 financial year. You carry on your enterprise in a partnership with your spouse, child, and your child's spouse. You experienced flooding to the area that resulted in disruption to business activities during the 2022-23 financial year. You provided photographs, videos, and references to news articles to substantiate the extent of the flooding and the damage caused. The flooding damaged the turf, pastures, fencing on your property and roads surrounding your property. This damage to the land created a risk of vehicles becoming bogged, with trucks bearing a larger risk. You were then unable to export and move your livestock due to this risk. This reduced sales and subsequently caused you to make a loss. You suffered a loss for the 2022-23 financial year and project to return to normal profit yields once recovery from the flood damage has been observed.

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 subsection 35-55(1)(a)