Private ruling: The Commissioner's discretion for non-commercial business losses
Date of advice: 24 October 2019
Published: January 2020
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Will the Commissioner exercise the discretion to allow you to include any losses from your agribusiness in the calculation of your taxable income? | 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 one of the four tests. You expect to pass a test in the year ending 30 June 20XX. 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 ITAA 1997. You carry on a business of cattle farming. You commenced business operations in the year ended 30 June 20XX. You operate as a partnership. You currently have a number of steers. You submit that your business was affected by special circumstances in the year ended 30 June 20XX. You have experienced severe drought conditions. Feed bales increased in price and became impossible to obtain. Cattle prices fell dramatically, and if you had sold the steers in May 2019 you would not have met the assessable income test. You made the decision not to sell your steers, instead holding them for another year. These circumstances have resulted in you being unable to pass any of the four tests in the year ended 30 June 20XX. You plan to sell your steers in May 20XX. You expect to make $20,000 in assessable income in the year ended 30 June 20XX.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 35-10(1) | Income Tax Assessment Act 1997 subsection 35-10(2A) | Income Tax Assessment Act 1997 subsection 35-10(2E)