Private ruling: Non-commercial losses - Commissioner's discretion - special circumstances
Date of advice: 27 May 2020
Published: July 2020
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2018

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 primary productionbusiness activity in your calculation of taxable income? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner will exercise the discretion. It is accepted that your business activity was affected by special circumstances outside your control which prevented you from passing a test. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au

Relevant facts and circumstances: You satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You are carrying on a primary production business activity. The business activity has met the assessable income test in all previous years of operation. During the 20XX-XX financial year the property was affected by drought conditions which has reduced the capacity to produce income. The drought has also impacted the availability of both feed and ground water as the property is watered by dams. You were forced to sell the majority of your livestock retaining only a small amount in the hope to rebuild from once the drought breaks. You expect to meet the assessable income test or produce a tax profit, each year once conditions return to normal.

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)