Private ruling: Non-commercial losses - special circumstances
Date of advice: 29 May 2021
Published: August 2021
Ruling period: Income year ended 30 June 20XX
Date scheme commenced: DDMMYY

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 primary production business activity in your calculation of taxable income for the income year ended 30 June 20XX? | 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, namely drought, outside your control which prevented you from making a profit. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You operate a primary production enterprise in partnership with your spouse. Your employment income will exceed $250,000 for the year ended 30 June 20XX. The enterprise operates on AAAA acres of land in rural Australia. Since purchase, the land has been developed for primary production purposes. Small quantities of stock have been grazed on this land. Given improvements this land has doubled in value. You are now in the process of purchasing another block nearby, being another BBBB acres. This will assist in having size and scale to graze CCC to DDD head of stock which aid the long term viability of the enterprise. 20ZZ was a record dry year (driest in 150 years). You destocked the farm and then developed and improved the land. The enterprise had nil income in 20XX due to having destocked. The region is still fully drought declared. Restocking is not commercially viable.

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)


This ruling applies for the following period: