Private ruling: Commissioner's discretion for non-commercial losses
Date of advice: 25 February 2021
Published: April 2021
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion to allow you to include any losses from your cattle fattening business in the calculation of your taxable income for the 20XX-XX financial year? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted that your business activity was affected by special circumstances outside your control which prevented you from passing a test. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997 for the 20XX-XX financial year. You carry on a business of cattle fattening on a property. You commenced business operations in the 20XX-XX financial year. You have been clearing more land and growing grass for cattle to graze and fatten for sale in the 20XX-XX financial year. However, COVID-19 and associated government restrictions reduced the opportunities for sales of your cattle due to a decrease in live export boats to sell cattle to and reduced cattle auctions. You anticipate growing and turning a profit as COVID-19 restrictions are eased for live exports gatherings and cattle auctions. Cattle prices have risen over a number of months prior to your private ruling application which will help your profits. Your property was impacted by a major weather event in Month X 20XX. This prevented the grazing and fattening of your cattle and they did not progress to weights needed for sale. You are still experiencing the effects of the weather event and have had to do major work using your own funds on the erosion caused, purchase feed and do fencing and irrigation works with no State or Federal funding.

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)