Private ruling: Non-commercial business loss
Date of advice: 22 December 2021
Published: March 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 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 financial year.

Relevant facts and circumstances: You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a business. You commenced business operations in the 20XX financial year. In the 20XX financial year Covid-19 impacted your business activity. Your business was impacted in the following ways: • Countries were forced to close borders which impacted the international travel and heavily reduced the number of bookings. • Covid-19 lockdown restrictions put in place limited the movements of people, in domestical markets, which also affected your bookings. You advised you would have met the assessable income test in the 20XX financial year had you not been impacted by Covid-19. Based on your projected cashflow statement, you intend to meet the $20,000 assessable income test and make a profit in the 20XX 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)