Private ruling: Commissioner's discretion - non-commercial losses - special circumstances
Date of advice: 1 September 2022
Published: November 2022
Ruling period: Period 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 your calculation of taxable income for the 20XX income year? | A1: Yes. Having regard to your full circumstances it is accepted that your business activity was affected by special circumstances outside your control. It is accepted that but for the special circumstances, you would have made a tax profit. Consequently, the Commissioner will exercise his discretion in the 20XX income year.

Relevant facts and circumstances: You commenced carrying on a business of XXXX breeding. You also grow XXXX. Severe weather events impacted the profitability of your business activity. Your business was impacted in the following ways: • XXXX couldn't be harvested early enough and by the time machinery could access the paddocks the crop had gone to seed. • You incurred significant agistment costs due to XXXX not being able to be grazed on your land. • XXXX had reduced weight gain due to agistment land not as nutritious as your land. This resulted in delayed sales of some XXXX. • The extreme rain caused the dam to break. • The weather events caused extensive damage to several windbreaks which needed to be replaced. If not for the severe weather events, you would have made a profit. You do not satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.

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)