Private ruling: Non-commercial losses
Date of advice: 18 June 2019
Published: August 2019
Ruling period: Year ending 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 201X

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 activity in your calculation of taxable income for the 20XX-XX and 20XX-XX financial years? | A1: Yes Having regard to your full circumstances, the Commissioner has granted his discretion as it is accepted that your business activity was affected by special circumstances outside your control which caused you to make a loss. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: Your income for non-commercial loss purposes for the 20XX-XX and 20XX-XX financial years is over $250,000. You are carrying on a business (the activity). The farm is run by your business partner and you receive and incur a percentage of the profits and expenses. The farm is subdivided in three areas, to prevent the farmland from becoming nutrient-poor. One area is cropped per year a second has grass and hay growing and the third is in fallow. This rotation ensures that each year there can be a harvestable crop. Unfortunately due to drought and lack of soil moisture, the land did not produce any crops. It is unknown when the farm will begin to sell the grain again due to the impact of the current drought situation.

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)