Private ruling: Non-commercial losses
Date of advice: 9 January 2018
Published: May 2018
Ruling period: Year ended 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) 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 2016-17 financial year? | A1: Yes Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control. It is also accepted that, but for the special circumstances, you would have made a tax profit, and you have met, or would have met one of the four tests. Consequently the Commissioner will exercise his discretion in the 2016-17 financial year.

Relevant facts and circumstances: Your income for non-commercial loss purposes for the 2016-17 financial year is over $250,000. You carry on a business. You commenced business operations in 2003. You submit that you were affected by special circumstances in the 2016-17 financial year. You submit that circumstances impacted on the profitability of your business in the following way: ● You have suffered from an illness in 201X. ● You have been ill during the 2016-17 financial year which reduced your capacity to work in the business, which has led to a loss from trading. ● You received income protection insurance payments during the 2016-17 financial year ● You intend to return to profit in the 2017-18 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)(a)