Private ruling: Non-commercial business losses and the Commissioner's discretion
Date of advice: 8 September 2017
Published: January 2018
Ruling period: Year ended 30 June 2017 | Year ended 30 June 2018 | Year ended 30 June 2019
Date scheme commenced: 1 July 2016

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(c) of the Income Tax Assessment Act 1997 to allow you to include any losses from your cattle breeding business activity (the activity) in the calculation of your 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 in the 2016-17 to 2018-19 financial years. For more information on non-commercial losses, please visit our website at https://www.ato.gov.au/Business/Non-commercial-losses/, or search quick code QC 33774 at www.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 commenced the activity on DDMMYY on a property in X You began the activity by purchased a number of cattle in the 2016-17 financial year, and plan to increase the breeding stock to approximately 100 breeding stock over time. You advised that there is a lead time of three years between buying livestock and the gestation and growing periods before you can sell the offspring. 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), and | Income Tax Assessment Act 1997 Paragraph 35-55(1)(c).