Private ruling: Non-commercial losses - special circumstances
Date of advice: 18 February 2026
Published: 7 April 2026
Ruling period: Year ended 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 the calculation of your taxable income for the year ended 30 June 20XX? | A1: Yes. Having regard to your circumstances, it is accepted that your business activities was affected by special circumstances that prevented you from passing the assessable income test. Accordingly, the Commissioner will exercise the discretion and allow you to include any losses from your business activity in the calculation of your taxable income.

Relevant facts and circumstances: You are a sole trader carrying on an artistic business. You generate work though repeat clients, referrals, informal enquiries, and short-notice bookings. Formal documentation is usually provided closer to the event date or once the work has been completed. In the year ended 30 June 20XX, your assessable income was reduced due to a health issue. A health issue prevented you from undertaking work for several months and you subsequently cancelled all work for those months. Your assessable business income for the year was less than $20,000. In earlier years, your business activity earned income exceeding $20,000.

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)