Private ruling: Commissioner's discretion - non-commercial losses lead time
Date of advice: 14 November 2022
Published: 16 January 2023
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)(c) of the Income Tax Assessment Act 1997 (ITAA 1997) (lead time) to allow you to include any losses from your livestock business in your calculation of taxable income for the 20XX income year? | A1: Yes

Relevant facts and circumstances: You are an individual who operates a livestock farm on a property owned by you. You will make a loss from your business activity. You will satisfy three of the four tests. As the property was largely unimproved at the time of purchase, you subsequently invested in capital improvements. Stock was purchased shortly after the acquisition of the property, and the first sale will occur before end of the 20XX financial year. You intend on breeding up the cattle numbers. You have provided summaries of your business operations and profit forecasts which indicate that you expect to make a profit within the lead time. Your income for non-commercial loss purposes for the 20XX financial year will be more than $250,000. You anticipate that the business will produce a profit in the 20XX financial 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)(c)