Private ruling: Commissioner's discretion - non-commercial losses
Date of advice: 13 November 2020
Published: January 2021
Ruling period: Year ending 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 farming business in the calculation of your taxable income for the 20XX-XX financial year? | 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 outside your control which prevented you from passing a test. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You and your partner operate a business with the purpose of selling meat and breeding stock. Your plan to increase building the herd through breeding and purchasing new animals was postponed due to the continuing drought conditions. Your property received drought breaking rain at start of the 20XX year. You have purchased a new purebred to resume your breeding program and plan on purchasing further stock, now that the dams are full and the grass and brush are growing well on your property. The drought prevented your business activity from meeting the assessable income test in the 20XX-XX financial year.

Relevant legislative provisions: I ncome 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)