Private ruling: Commissioners discretion for non-commercial losses - special circumstances
Date of advice: 27 August 2021
Published: November 2021
Ruling period: Year ending 20XX
Date scheme commenced: 1 July 20XX

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 20XX-XX 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 and that these prevented you meeting one of the four tests. Consequently, the Commissioner will exercise his discretion in the 20XX-XX financial years.

Relevant facts and circumstances: You satisfy the under $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a business which assists individuals with working through issues that may arise personally or in business. Part of the service is the sale of various products to assist with the process and you receive a commission from the sale of the products as well as fees paid by clients. Extensive travel and continued training is required to allow the business to continue. You commenced business operations in the 20XX-XX financial year. In the 20XX-XX financial year the lockdowns, travel and other restrictions put in place due to Covid-19 impacted your business activity which resulted in losses. You intend to make $XXX in assessable income in the 20XX-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)(a)