Private ruling: Commissioner's discretion - special circumstances
Date of advice: 7 July 2025
Published: 1 September 2025
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion under paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (the ITAA 1997) to allow you to include losses from your primary production business activity in calculating your taxable income for the 20XX-XX income year? | 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 from making a tax profit. Consequently, the Commissioner will exercise his discretion in the 20XX-XX income year.

Relevant facts and circumstances: You do not satisfy the income requirement of less than $250,000, as set out in subsection 35-10(2E) of the ITAA 1997. You sold a parcel of farmland and withdrew from your FMD in the 20XX-XX income year. This resulted in your not satisfying the income required. You commenced your farming business many years ago. You provided us with details on where the farm is located. Your farming operations include merino sheep for both wool and meat production, beef cattle, and cropping for livestock feed. Hay is routinely purchased to sustain stock through the winter. You do not classify the region as drought-prone, and your farm operations have not been affected by any previous droughts. You made consistent tax profits over 5 consecutive income years immediately preceding the ruling year. You provided rainfall data recorded at the nearest Bureau of Meteorology station to your farm for the 12 calendar years from 20XX to 20XX. In the relevant year, a bushfire destroyed the farm fencing partially and a large area of grazing land, significantly reducing available pasture. During the ruling year, rainfall was below average and poorly timed, affecting feed quality and availability. As a result, livestock productivity declined, with lamb markings falling dramatically compared to the previous income year. The primary challenges faced during the ruling year were due to poor commodity prices and forced sales, rather than poor management. Planning decisions were influenced by weather forecasts that predicted a return to normal conditions. The lack of regular buyers and poor market conditions led to increased feed costs due to extended holding periods and reduced sale prices. You provided comparable financial information for the ruling year and prior years.

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)