Private ruling: Non-commercial losses - less than $250,000 - special circumstances
Date of advice: 11 October 2021
Published: December 2021
Ruling period: Income 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 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 and that these prevented you meeting one of the four tests. Consequently, the Commissioner will exercise his discretion in the 20XX income year.

Relevant facts and circumstances: You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a business. You commenced business operations in December 20XX and began providing XX services for XX projects in XX, just before the COVID-19 pandemic occurred. In the 20XX and 20XX income years COVID-19, bushfires and flooding in your region impacted your business activity. While you intended to continue providing services to established clients, the downturn in the economy resulting from the natural and health disasters limited the work available for you. This impacted your ability to generate income consistently. You intend to make $20,000 assessable income in the 20XX income year.

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)