Private ruling: Non-commercial losses - Commissioner's discretion - lead time
Date of advice: 8 March 2021
Published: May 2021
Ruling period: Financial year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion to allow you to include any losses from your business in the calculation of your taxable income for the 20XX-XX financial year? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted there is a 'lead time' in the nature of your business activity and you will make a tax profit within your industry's commercially viable period. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You do not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997 . You commenced business as a sole trader late in the financial year. The nature of the business requires that work be undertaken and there is a build-up of work in progress that is invoiced at agreed stages or at the completion of the work. For this reason, minimal business income was generated in the initial period of operation, resulting in a business loss for the year ending 30 June 20XX. The business has been profitable in the subsequent periods.

Relevant legislative provisions: Subsection 35-10(2E) of the Income Tax Assessment Act 1997 | Paragraph 35-55(1)(c) of the Income Tax Assessment Act 1997