Private ruling: Non-commercial business losses and the Commissioner’s discretion
Date of advice: 28 August 2018
Published: October 2018
Ruling period: Year ending 30 June 2017
Date scheme commenced: 1 July 2016

Ruling: Q1: Are your currency trading business activities undertaken under a partnership arrangement and as a sole trader, considered to be “businesses activities of a similar kind” for the purpose of subsection 35-10(3) of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. It is accepted that your business activities undertaken under a partnership arrangement and as a sole trader, are ‘business activities of a similar kind’ for the purpose of subsection 35-10(3) of the ITAA 1997. | Q2: Do you pass the income requirement set out in subsection 35-10(2E) of the ITAA 1997? | A2: Yes. You pass the income requirement set out in subsection 35-10(2E) of the ITAA 1997, as the sum of your taxable income, reportable fringe benefits, reportable superannuation contributions and net financial investment losses is less than $250,000. | Q3: Will the deferral rule contained in subsection 35-10(2) of the ITAA 1997 apply to prevent your activity losses from being offset against other assessable income in the 2016-17 financial year? | A3: No. The deferral rule contained in subsection 35-10(2) of the ITAA 1997 will not apply to prevent your activity losses from being offset against other taxable income, as you satisfy the assessable income test at paragraph 35-30(a) of the ITAA 1997 2016-17 financial year.

Relevant facts and circumstances: You carry on currency trading business activities under both a sole trader and partnership arrangement. For the 2016-17 financial year you made a net taxable loss from the sole trader activity and your share of the partnership loss. Your taxable income for the 2016-17 financial year was less than $250,000. You did not have reportable fringe benefits, reportable superannuation contributions or net financial investment losses for the 2016-17 financial year.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 35-10(2) | Income Tax Assessment Act 1997 Subsection 35-10(2E) | Income Tax Assessment Act 1997 Subsection 35-10(3) | Income Tax Assessment Act 1997 Paragraph 35-30(a)