Private ruling: Non-commercial losses - Commissioner's discretion - special circumstances
Date of advice: 13 April 2022
Published: July 2022
Ruling period: Year ended 30 June 20YY
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35 - 55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business activity in your calculation of taxable income for the 20YY financial year? | A1: Yes Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control and that these prevented you meeting one of the four tests. Consequently, the Commissioner will exercise his discretion in the 20YY financial year.

Relevant facts and circumstances: You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You carry on a business which provides services. You commenced business operations in the 20XX financial year. In the 20YY financial year COVID-19 impacted your business activity. Your business was impacted in the following ways: • Clients have cancelled their bookings with you due to cancelling their events. • Lockdowns and other restrictions have limited or prevented people from having events, which has reduced the demand for your services. You have provided evidence of bookings cancelled in the 20YY financial year. The total income from these bookings would have been approximately $X. You have provided an income projection for the 20YY financial year on the basis that your business was not affected by COVID-19. Your total projected income for the 20YY financial year if it were not for COVID-19 was $X.

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)