Private ruling: Non commercial losses
Date of advice: 16 September 2021
Published: November 2021
Ruling period: XXXX to 30 June XXXX

Ruling: Q1: Will the Commissioner exercise the discretion under section 35-55 of the Income Tax Assessment Act 1997 to allow you to include any losses from your primary production business activity- grazing / cropping farming in the calculation of your taxable income for the XXXX financial years? | 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 XXXX financial years.

Relevant facts and circumstances: You are carrying on a new primary production business as a sole trader at XXXX. When the property was acquired, there were no livestock or crops on the property. On the XXXX, you sought an ABN because the contract for the land had been signed and settlement was the XXXX. You plan to build up your livestock for sale. Crops will also be planted annually depending on soil type and season. You have purchased the necessary plant, equipment and stock. The COVID 19 Tax Concessions for Small Business and accelerated depreciation will have an impact on the tax profit for the years up to and including XXXX. XXXX of XXXX provided documentation that a Lead time of XXXX years is the commercially viable period required for you to make a tax profit. During the XXXX financial year your income for non-commercial loss purposes was more than $250,000.

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)