Private ruling: Commissioner's discretion - non-commercial losses
Date of advice: 3 April 2025
Published: 10 June 2025
Ruling period: 1 July 2023 to 30 June 2024
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 2023-24 financial 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 the discretion in the 2023-24 financial year.

Relevant facts and circumstances: Your taxable income was less than $250,000. You carry on a primary production business. In the 2022-23 financial year your plan was to improve the land to support livestock. In the 2023-24 financial year you purchased livestock for breeding and growing the livestock. For a period, drought affected the profitability of your business activity. You provided evidence regarding the drought. Your business was impacted in the following ways: • a lack of fodder caused a reduction in the weight and condition of livestock, sales were not possible • there were additional costs to keep the livestock fed. You expect your business activity to pass the assessable income test in 2024-25 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)