Private ruling: Non-commercial losses and the Commissioner’s discretion.
Date of advice: 19 December 2017
Published: May 2018
Ruling period: Year ending 30 June 2017 | Year ending 30 June 2018
Date scheme commenced: 1 April 2017

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(c) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your primary production business in your calculation of taxable income? | A1: Yes. Having regard to your full circumstances, it is accepted that it is in the nature of the business activity that has prevented you making a tax profit. It is also accepted that you will make a tax profit within the commercially viable period for your industry. Consequently the Commissioner will exercise his discretion. For more information on non-commercial losses, please visit our website www.ato.gov.au and enter quick code “QC 33774” in the search area at the top of the page.

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 carry on a primary production business. You commenced business in XXXX. You have provided evidence to show that businesses in your industry are expected to produce a profit within three years of commencing business. You have incurred expenditure in the XXXX-XX financial year in relation to the initial setup costs. You will have ongoing costs in the XXXX-XX financial year with no sales expected until the XXXX-XX financial year. Your projected income and expenditure shows expected assessable income of more than $20,000 and a taxable profit in the XXXX-XX 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)(c)