Private ruling: The Commissioner’s discretion for non-commercial losses
Date of advice: 27 February 2018
Published: June 2018
Ruling period: Financial year ending 30 June 20XX | Financial year ending 30 June 20XX | Financial year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion under section 35-55 of the Income Tax Assessment Act 1997 (ITAA 1997) and allow you to include the losses from your grape growing and wine making business activity in the 20XX to 20XX financial years? | A1: Yes. Having considered your circumstances and the relevant factors, the Commissioner is able to apply his discretion under subsection 35-55(1) of the ITAA 1997 for the 20XX to 20XX financial years. Further information on non-commercial losses can be found on our website ato.gov.au and entering Quick Code QC33774 into the search bar at the top right of the page.

Relevant facts and circumstances: You are currently employed. You meet the income requirement under subsection 35-10(2E) of the ITAA 1997. In financial year 20XX you purchased a property with the intention to produce wine. You planted wine grape vines in financial year 20XX. Your first harvest of wine grapes occurred in financial year 20XX. You produced wine. It takes between 12 and 18 months for the wine in the barrels to mature to a point that it can be sold by way of wholesale or through the cellar door. The barrelled wine will produce wine for sale. You project a harvest of grapes in financial year 20XX. You project a harvest of grapes in financial year 20XX. You plan to use all of the grapes produced on the property in your wine making business activity. You will commence selling wine from the cellar door in the 20XX financial year when the first grapes harvested in 20XX will be in a saleable state as wine. The wine making business activity has not produced assessable income greater than allowable deductions in three of the last five financial years (including the current financial year). You project that you will produce assessable income greater than the allowable deductions in 20XX financial year. You project that you will meet or exceed the assessable income test in the 20XX financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 35-10 | Income Tax Assessment Act 1997 section 35-30 | Income Tax Assessment Act 1997 section 35-35 | Income Tax Assessment Act 1997 section 35-40 | Income Tax Assessment Act 1997 section 35-45 | Income Tax Assessment Act 1997 section 35-55