Private ruling: Commissioner's discretion - non-commercial losses
Date of advice: 13 April 2022
Published: July 2022
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business activity in your calculation of taxable income for the 20XX and 20XX financial years? | A1: Yes. Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control and that these prevented you meeting one of the four tests. Consequently, the Commissioner will exercise his discretion in the 20XX and 20XX financial years.

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. In the 20XX and 20XX financial years, after you operated the business for XX and achieved your revenue targets, your health condition and the COVID-19 restrictions impacted your business activity. Your business was impacted in the following ways: • The health condition reduced your capacity to operate the business. • The COVID-19 restrictions further prevented you from earning any business income. You provided income projection based on the actual income derived from XX. It shows that you would have met the assessable income test if it was not for the special circumstances. You expect the business will be profitable from the 20XX 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) | Income Tax Assessment Act 1997 paragraph 35-55(1)(a)