Private ruling: Non Commercial Losses
Date of advice: 8 May 2019
Published: June 2019
Ruling period: Year ended 30 June 2018 | Year ended 30 June 2019 | Year ended 30 June 2020 | Year ended 30 June 2021 | Year ended 30 June 2022 | Year ended 30 June 2023 | Year ended 30 June 2024 | Year ended 30 June 2025
Date scheme commenced: 1 July 2017

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(c) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your primary production business in your calculation of taxable income for the financial years ending 2018 to 2025? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted there is a 'lead time' in the nature of your business activity and you will make a tax profit within your industry's commercially viable period. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au.

Relevant facts and circumstances: Your individual incomes for non-commercial loss purposes are expected to be below $250,000 in the financial years to 2025. You have conducted extensive research and sought advice from industry experts in relation to the establishment of a farm. The farm is located at a suitable location in a well-established growing region. You undertook extensive soil testing and preparation at the farm. This included extensive ploughing and deep ripping as well as heavy applications of lime and other minerals which you were advised were necessary to prepare the soil adequately for the farm. You planted trees in mid-20XX. In addition, other native and non-native trees were planted to provide shelter from weather. All of the trees were prepared as required to ensure they produce your crop You applied for a permit from the local Department of Primary Industries to import these seedlings without breaching biosecurity guidelines. You conduct site visits to monitor progress and assess maintenance requirements. This also allows you to monitor for weed control purposes. Your projections show that you expect a small amount of crop in year eight with income from sales of over $20,000. You also project a profit from the crop in year nine.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 35-1. | Income Tax Assessment Act 1997 Subsection 35-10(2E). | Income Tax Assessment Act 1997 Subsection 35-55(1) | Income Tax Assessment Act 1997 Paragraph 35-55(1)(c).