Private ruling: Commissioner's discretion - losses from business activity
Date of advice: 13 July 2023
Published: 4 September 2023
Ruling period: Year ended 30 June 2022
Date scheme commenced: 1 July 2021

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(c) 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 2021- 22 financial year? | A1: Yes. Having regard to your full circumstances, it is accepted that it is the nature of the business activity that has prevented you from making a tax profit. It is also accepted that you will make a tax profit within the commercially viable period for your industry. Consequently, the Commissioner will exercise his discretion in the 2021- 22 financial year.

Relevant facts and circumstances: You do not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a farming business. You commenced business operations in the 2021- 22 financial year. In 2021- 22 financial year, you purchased a number of livestock. You made a loss in that financial year from the activity. You have provided a profit and loss statement for the 2022-23 financial year, showing that you have made a profit, which would be within the commercially viable period for your industry.

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)(c)