Private ruling: Non-commercial business losses and the Commissioner's discretion
Date of advice: 23 October 2017
Published: March 2018
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018 | Year ending 30 June 2019
Date scheme commenced: 1 July 2016

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 primary production business activity in your calculation of taxable income for the 2016-17 to 2018-19 financial years | A1: Yes. Having regard to your full circumstances, it is accepted that it is in the nature of the business activity that has prevented you making a tax profit. It is also accepted that you will make a tax profit within the commercially viable period for your industry. Consequently the Commissioner will exercise his discretion for the 2016-17 to 2018-19 financial years.

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 which commenced in the XXXX-XX financial year. You began the activity by purchasing a number of trees in the XXXX-XX financial year, and plan to increase the stock to approximately XXX trees over time. You advised that there is a lead time between buying the trees and growing periods before you can harvest them for sale. As such you expect the activity to incur losses for the 2016-17 to 2018-19 financial years, and become profitable in the 2019-20 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)(b)


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