Private ruling: Non-commercial losses
Published: March 2015
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Will the Commissioner allow you to include any losses from your business activity in your calculation of taxable income for the 2013-14 financial year? | A1: Yes


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 subsection 35-55(1)

Reasons for decision: Summary: For the 2009-10 and later financial years, Division 35 of the ITAA 1997 will apply to defer a non-commercial loss from a business activity unless: • you meet the income requirement and you pass one of the four tests • the exceptions apply • the Commissioner exercises his discretion. You pass the Assessable Income test in section 35-30 ITAA 1997 if your assessable income from a business activity for the year is at least $20,000. The calculation of the assessable income from the activity can involve making a 'reasonable estimate' of assessable income that would have been derived from the business activity if it had been carried on for the whole income year in question (subsection 35-30(b) ITAA 1997). The assessable income from your business activity would have been at least $20,000, had your activity been carried on throughout the year. Therefore you pass the assessable income test and therefore can claim your losses in the 2013-14 financial year.

You carried on a business. | The business ceased trading partway through the financial year. | Had the business been operating for the full financial year the turnover would have been in excess of $20,000.