Private ruling: Non-commercial losses
Date of advice: 11 April 2019
Published: June 2019
Ruling period: Year ended 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the loss deferral rule in subsection 35-10(2) of the Income Tax Assessment Act 1997 (ITAA 1997) apply to your business activity for the 20XX financial year? | A1: No. Having considered your circumstances and the relevant factors the Commissioner considers that the business activity undertaken by the partnership are capable of being grouped with the business activity undertaken as a sole trader. Therefore the loss deferral rule will not apply to the activity in the 20XX financial year.

Relevant facts and circumstances: You carried on an activity as a partner in a partnership with other individuals. The partnership consisted of several primary production activities. The decision was made to terminate the partnership and sell its assets near the end of the 20XX financial year. You purchased the assets necessary for you to continue some of the primary production activities in your capacity as a sole trader. This has resulted in large balancing adjustment events for the depreciating assets of the partnership. The surplus farm equipment was also sold. You received a partnership distribution, and incurred expenses as a sole trader. The activities have produced a tax profit for you in the 20XX financial year, with the income from one entity and the expenses in another.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 35-10