Private ruling: Commissioner discretion - professional business
Date of advice: 5 December 2023
Published: 29 January 2024
Ruling period: 20YY-YY financial year
Date scheme commenced: 1 July 20YY

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) 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 2022-23 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 one of the four tests being passed. It is also accepted that you will pass one of the four tests or make a tax profit within the commercially viable period for your industry. Consequently, the Commissioner will exercise his discretion in the relevant financial year.

Relevant facts and circumstances: You do not satisfy the $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You started working as a professional in the 2022-23 financial year and been engaged by clients during this time. You are working from a rented-out office space and being provided administration support. You are currently working full-time. In starting your work, you have incurred expenses related to the requirements of your work type. You have advised that you have unbilled work that you will receive payment for in the new financial year. You have provided information to show that within the commercially viable period you will make a tax profit.

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)