Private ruling: Non-commercial losses - lead time
Date of advice: 26 February 2026
Published: 20 April 2026
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

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 20XX to 20XX income tax years? | A1: Yes.

Relevant facts and circumstances: Your business activity commenced in XXX 20XX. Your business activity is the professional authorship and self-publishing of books. Since July 20XX, you have published X titles. All titles are distributed internationally through various online platforms. The business operates as a micro-enterprise with a growing international readership base and reinvests early-stage revenue into production, marketing, and audience growth. You currently manage all aspects of the publishing process - manuscript creation, editing coordination, cover design, formatting, marketing, etc. During the 20XX income tax year, you had X sales and a loss of over $XX. During the 20XX income tax year, you had over $X of sales and over $XX of expenses resulting in a loss of over $X. You sold over XX units (incl eBook's, paperback and hardcover copies). Your projected sales and income summary for the 20XX and 20XX financial years are: Table 1: Projected sales Financial year Scenario Projected units sold Projected income (AUD) Key assumptions 20XX-XX Baseline (no new titles) XX - XX $XX - $XX Existing X-title catalogue only, organic growth, repeat Christmas sales, no viral explosion of sales 20XX-XX Expanded catalogue XX - XX $XX - $XX Adds X new title plus X other language edition plus audiobook before end of 20XX/XX financial year (partial-year) 20XX-XX Baseline (no new titles) XX - XX $XX - $XX Compounding reviews, stronger algorithm visibility, mature backlist 20XX-XX Expanded catalogue XX - XX $XX - $XX Full-year catalogue effect, cross-promotion, continued international reach Over the next X months, you have plans to release additional English language titles, with another language edition of each title to expand the international market reach. Final topic selection and release sequencing will be informed by online marketplace data, including keyword demand, category performance, competitive analysis, and pricing viability. This ensures that each title is commercially viable while remaining within your established professional scope. Titles will also be released in multiple formats (print, ebook, and audiobook) to maximise accessibility and revenue potential. You actively market your books using a multi-channel strategy. Your primary marketing activity is through online advertising, supported by ongoing promotion through social media and direct sales through your business location. Your target audience is defined based on market research and aligns with the categories of buyers most likely to purchase your particular educational material. The audience includes XX, XX, XX, and XX enthusiasts seeking practical, evidence-based guidance. Business and market analysis was undertaken prior to publishing. This analysis was conducted to confirm commercial viability, demand, pricing sustainability, and advertising feasibility, rather than for personal or recreational reasons. You spend X - X hours per week on your business activity whilst you're in the publishing and initial establishment phase of your books. This time was required for research, content development, coordination with editors and designers, proofreading, formatting, platform setup, metadata optimisation, pricing decisions, and preparing marketing and advertising campaigns prior to launch. Now that your books are live and actively selling online, the business requires an ongoing commitment of approximately X-X hours per week. This time is spent on: • Monitoring and analysing sales performance across multiple marketplaces • Actively managing online advertising campaigns, including tracking impressions, clickthrough rates, bids, and advertising cost of sale. • Adjusting keywords, budgets, and targeting strategies to improve efficiency and profitability • Reviewing royalties, accounting records, and platform reporting • Planning future marketing initiatives and additional titles. You expect that this commitment will again increase more towards XX+hrs per week in the coming months now that you have begun working on a new title. You are a sole trader and you spend approximately XX-XX hours per week undertaking your employment duties, with your office hour availability being between X:00 am to X:00 pm, Monday to Friday. As a sole trader, your role includes not only direct consultations but also associated professional duties such as program design, note writing, report writing, liaising with case managers, as well as ongoing professional development and accounting activities. During the previous financial year, you also undertook additional work, which involved travelling to your nearby city up to X days per week to work within a program. On those days, you would leave your employment commitments earlier to allow for travel, which was approximately X hours each way. This additional role represented an average commitment of approximately X hours per week, inclusive of travel time. At the time you began your publishing activities, you were however not engaged in any external commitments, which allowed you to dedicate additional time to establishing the publishing side of your business. Your other income is less than $XXX.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 995-1(1) | Income Tax Assessment Act 1997 Division 35