Private ruling: Commissioner uses their discretion for a non-commercial loss to be treated as an allowable deduction
Date of advice: 30 November 2018
Published: March 2019
Ruling period: Year ending 30 June 20XX
Date scheme commenced: 1 July 20XX

Ruling: Q1: Will the Commissioner exercise his discretion to allow the deceased to include any losses from their business activity in the calculation of their taxable income for the 20XX-XX financial year? | A1: Yes. Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted that your business activity was affected by special circumstances outside your control which caused you to make a loss. 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. The taxpayer was diagnosed with cancer in 20XX. The taxpayer was an individual for taxation purposes. The taxpayer did not work in the 20XX financial year due to the illness which made the taxpayer physically incapable of continuing the business as previously run. Due to the nature of the business, income continued to be received for work invoiced earlier, however commercial responsibilities required certain expenses to be ongoing even though no income was being earned. These circumstances prevented the taxpayer from meeting either the profits test in three of the last five years, or the assessable income test in the 20XX financial year. The taxpayer would have met these tests under normal circumstances and had done so for many years previously. The taxpayer’s adjusted taxable income was over $250,000 for the 20XX financial year, as a result of net taxable capital gains from the sale of a rental property. The taxpayer’s business incurred losses of $XX for the 20XX financial year. The taxpayer did not pass the assessable income test, profits test, real property test or other assets test during the 20XX financial year. The taxpayers passed away in late 20XX.

Relevant legislative provisions: Income Taxation Assessment Act 1997 section 35-10 | Income Taxation Assessment Act 1997 section 35-30 | Income Taxation Assessment Act 1997 section 35-35 | Income Taxation Assessment Act 1997 section 35-40 | Income Taxation Assessment Act 1997 section 35-45 | Income Taxation Assessment Act 1997 section 35-55