Private ruling: Non-commercial losses - Commissioner's discretion
Date of advice: 19 December 2019
Published: February 2020
Ruling period: Financial years ending 30 June 20XX to 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) 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 financial years ending 30 June 20XX to 30 June 20XX? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner will exercise the discretion. It is accepted there is a 'lead time' in the nature of your business activity and you will pass a test or make a tax profit within your industry's commercially viable period. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. You own a property. You undertook research to determine the best use of the open pasture on the property. You are using 1 hectare of the property to establish a primary production activity. You conducted soil testing on the site, as well as consulted industry experts, to determine what preparation needs to be completed before planting. You have commenced preparing the site with planting to occur during late autumn and winter 20XX. You have purchased equipment for the purpose of site cultivation, maintenance and installation of irrigation. You have joined an industry association which will enable you to utilise their network of growers and wholesalers to sell product on the domestic and export markets. You are continuing to source ongoing advice from established growers in the area and other professional persons involved in the industry. You have provided projected profit and loss figures which indicate that the activity will pass the $20,000 assessable income test in the financial year ended 20XX-XX. You satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.

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)(b)