Private ruling: Non-commercial losses - professional arts business exception
Date of advice: 15 November 2019
Published: February 2020
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Can your business loss be offset against your other assessable income by virtue of the professional arts business exception contained in subsection 35-10(4) of the Income Tax Assessment Act 1997 ? | A1: Yes. Paragraph 89 of Taxation ruling TR 2001/14 provides that subsection 35-10(4) of the Income Tax Assessment Act 1997 contains an exception for primary production businesses or professional arts businesses that are carried on by certain individuals, where they have less than $40,000 of assessable income (excluding any net capital gain), from sources not related to their primary production business or professional arts business. Paragraph 90A of TR 2001/14 provides that when determining if the exception applies it is necessary to ascertain whether the individual's assessable income from sources that do not relate to the primary production business activity or professional arts business activity is less than $40,000. Consequently this also means that if the individual derives assessable income from other sources that do relate to that business activity, it will not be taken into account in determining if the $40,000 threshold is met. Having considered your overall circumstances we can confirm that the income you derived as a performing artist has a sufficient enough connection to your business activity to enable this income to not be taken into account in determining if the $40,000 threshold is met. As such and based on the information you have supplied to us, you will meet the requirements of the professional arts business exception contained in subsection 35-10(4) of the Income Tax Assessment Act 1997, which will enable you to offset your business losses against your other income.

Relevant facts and circumstances: You carry on a business in the performing arts industry, which involves the production of stage performances. You also earn employment income connected with stage production. You earned over $40,000 in assessable income from your employment income from your involvement in stage production. You incurred a loss from your business activity.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 35-10(4)