Private ruling: Non-commercial losses and the Commissioner’s discretion for special circumstances
Date of advice: 3 October 2018
Published: November 2018
Ruling period: Year ended 30 June 2018
Date scheme commenced: 1 July 2017

Ruling: Q1: Will the Commissioner exercise the discretion in to allow you to include any losses from your business in the calculation of your taxable income for the 2017-18 financial year? | A1: Yes. Having regard to your full circumstances, the Commissioner has granted his discretion as it is accepted that your business activity was affected by special circumstances outside your control which caused you to make a loss. 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 <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a business. You commenced business operations in the 20XX-XX financial year. You submit that you were affected by special circumstances in the 20XX-XX financial year. You signed a premise lease on X May 20XX for your business. At the end of May 20XX you were verbally notified by your landlord that the area located directly out the front of your premise entry was going to be redeveloped. As a result of the redevelopment, you were not able to start advertising as you were not able to communicate a definite timeline to people looking to access your business. The premise fitout was completed by X June 20XX and you would have been ready to trade except the redevelopment was preventing people from accessing your business. The redevelopment is still ongoing and is preventing safe access into your business. You will return a profit 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)