Private ruling: Commissioner's discretion - non-commercial losses
Date of advice: 6 April 2022
Published: June 2022
Ruling period: Year ended 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 business activity in the calculation of your taxable income in the 20XX income year? | A1: Yes. Having regard to your full circumstances, the Commissioner will exercise discretion in the 20XX income year. It is accepted that your business activity was affected by special circumstances outside your control, and that the circumstances prevented you from making a tax profit.

Relevant facts and circumstances: Your income for non-commercial loss purposes exceeds the $250,000 threshold as outlined in subsection 35-10(2E) of the ITAA 1997. You are engaged in a business activity which has commenced. Your business closed for a period of time due to special circumstances (COVID-19). As a result of the closure, your business profitability was affected. Your business activity income decreased compared to the prior income year. Your business activity expenses decreased compared to the prior income year. Your business has produced a tax profit in previous income years. You anticipate that your business activity will produce a tax profit in the next income year.

Relevant legislative provisions: Income Tax Assessment Act 1997 paragraph 35-55(1)(a) | Income Tax Assessment Act 1997 subsection 35-10(2E)