Private ruling: Commissioner's discretion - non-commercial losses
Date of advice: 1 December 2025
Published: 27 January 2026
Ruling period: Year ended 30 June 20XX | Year ended 30 June 20XX | Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise the discretion under paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include losses from your business activity in calculating your taxable income for the 20XX-XX, 20XX-XX and 20XX-XX income years? | A1: Yes. Having regard to your full circumstances, it is accepted that your business activity is affected by special circumstances outside your control and that these prevented you from making a tax profit. Consequently, the Commissioner will exercise his discretion in the 20XX-XX, 20XX-XX and 20XX-XX income years under paragraph 35-55(1)(a) of the ITAA 1997.

Relevant facts and circumstances: You do not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997. You are a sole trader and provide services on a contract basis to another organisation. In the 20XX financial year your injury affected the profitability of your business activity. You have X medical certificates from X surgeons where you were recommended surgery and have scheduled surgery in the coming months. Your injury affected your ability to earn income and make a profit in the 20XX-XX, 20XX-XX and the 20XX-XX income years. Your business has previously produced a profit. You expected your business activity to return to profit in the 20XX-XX 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) | Income Tax Assessment Act 1997 paragraph 35-55(1)(a)