Private ruling: Non-commercial Losses - Commissioner's Discretion: Lead Time
Date of advice: 26 September 2017
Published: February 2018
Ruling period: Year ended 30 June 2015 to 30 June 2018
Date scheme commenced: 1 July 2015

Ruling: Q1: Will the Commissioner exercise the 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 activity in your calculation of taxable income for the 2015-16 to 2017-18 financial years? | A1: Yes Having regard to your full circumstances, it is accepted that it is in the nature of the business activity that has prevented you making a tax profit. It is also accepted that you will make a tax profit within the commercially viable period for your industry. Consequently the Commissioner will exercise his discretion in the 2015-16 to 2017-18 financial years. For more information on non-commercial losses, please visit our website ato.gov.au and enter quick code QC 33774 into the search bar at the top right of the page.

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 on a property in State X. The business is primarily concerned with stock breeding. You commenced business operations in the 2015-16 financial year. Your business plan is to develop a particular stock herd and also to diversify into other breeds of stock. Your initial herd was selected for its genetic makeup. The land has undergone pasture improvements, along with building repairs and fence maintenance. There was a need for additional grazing land for additional stock in the first year while you were establishing your herd and selecting the right breeding stock to go forward. The additional land was required to house additional stock for a period of time. You are building your herd up to a size of X head of XX stock including stock offspring and YY male stock. Sire selection and artificial insemination providers is already underway. You intend to make a tax profit in the 2018-19 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) and | Income Tax Assessment Act 1997 paragraph 35-55(1)(c).