Private ruling: Non-commercial loss - lead time
Date of advice: 16 June 2023
Published: 7 August 2023
Ruling period: Period Ended 30 June 20XX
Date scheme commenced: 1 January 20XX

Ruling: Q1: Will the Commissioner exercise 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 the calculation of your taxable income for the relevant income year? | A1: Yes. The commissioner will exercise his discretion for the relevant income year. As outlined in TR Ruling 2007/6 paragraph 84, it is accepted there is an objective expectation that your business activity will satisfy a test or produce a tax profit in a future income year that is commercially viable for the industry concerned.

Relevant facts and circumstances: You do not satisfy the less than $250,000 income requirement set out in subsection 35-55(2E) of the ITAA 1997. You previously carried on a primary production business through a partnership, which commenced on a specified date several years ago. You commenced a sole trader primary production business on a particular date in the relevant income year. The sole trader business mirrors the partnership activities. You provided the date that the partnership is intended to be wound up by. You currently use the stock and assets owned by the partnership. The land you use for your business activity is owned by the partnership, however your sole trader business is conducted on a part of the land which has not previously been used by the partnership. You provided details of your sole trader business expenses for the relevant income year. You provided us with details of your crops and harvesting times. You provided us with your year-to-date profit/loss statement.

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