• Private ruling form (non-commercial losses)

    Overview

    There are tax laws in place to prevent losses from non-commercial business activities being used to reduce the tax paid on other assessable income, such as salary or wages. The measures apply to any individual undertaking a business activity, whether alone or in partnership with other individuals or entities.

    The Commissioner can exercise a discretion to allow the loss from your business activity in one of two circumstances:

    • special circumstances outside your control that prevent the business activity from meeting at least one of the four tests (the assessable income test, the profits test, the real property test, the other assets test) or making a tax profit. Special circumstances may include a drought, bushfire, flood or other natural disaster
    • you have started to carry on your business activity and, because of its nature, there is a period of time before it can pass one of the tests or make a tax profit. This period of time would be due to the nature of your activity and not because you are starting out small or building up a client base. For example, the nature of grape growing means that a number of years will pass between planting the vines and harvesting grapes to produce assessable income.

    You (or your agent) can complete this application to apply for the exercise of the Commissioner’s discretion.

    How to obtain this form

    You can download this form in Portable Document Format (PDF) – download Application for a private ruling on the exercise of the Commissioner's discretion for non-commercial business losses (NAT 5806, PDF, 480KB).

    Do you need to complete this application?

    You (or your agent) must complete this application to apply for the exercise of the Commissioner’s discretion.

    Attention

    If you are seeking the Commissioner’s discretion for several business activities, you must complete a separate application for each of your business activities (unless they are similar business activities).

    End of attention

    The Commissioner can only exercise the discretion if both of the following apply:

    • You are carrying on a business. A hobby is not a business and passive income from, for example, a rental property, is not generally considered to be income from carrying on a business.
    • You operate your business as a sole trader or an individual in partnership. The non-commercial business losses rulesExternal Link only apply to individuals who are carrying on a business.

    Partnerships

    The Commissioner cannot exercise the discretion for a partnership. However, where a business activity carried on by a partnership results in a loss, each individual partner can apply to the Commissioner for the exercise of the discretion.

    There are special rules that apply if you are operating your business activity as a partnership. Non-commercial losses: partnerships explains these rules and will assist you to complete this application.

    For more information on non-commercial losses:

    • visit Non-commercial losses
    • phone 13 28 66 from 8.00am to 6.00pm Monday to Friday
    • write to us at:

      Australian Taxation Office
      PO Box 3000
      PENRITH NSW 2740

    How to complete this application

    Attention

    You can:

    • complete this form on your computer and either
      • save it and submit it electronically via the Business Portal
      • print it and submit this printed copy
       
    • print the form and complete it by hand.
    End of attention

    How to lodge this form

    You can lodge this form as either an individual taxpayer or a tax professional.

    Lodging as an individual

    You can lodge this application:

    • electronically via the Business Portal (Go to ‘Online forms’, select ‘Private ruling application’ and attach your completed application. Click on ‘Submit further information’ to attach any supporting documentation for your request.)
    • by fax on 1300 139 011
    • hand delivery to an ATO shopfront
    • post to:

      Australian Taxation Office
      PO Box 3000
      PENRITH NSW 2740

    If you lodge via the Business Portal, you will receive an instant receipt and your application will be dealt with faster than if lodged by post.

    Lodging as a tax professional

    You can lodge this application:

    • electronically via the Tax Agent Portal (Go to ‘Online forms’, select ‘Private ruling application’ and attach your completed application. Click on ‘Submit further information’ to attach any supporting documentation for your request.)
    • by fax on 1300 139 011
    • hand delivery to an ATO shopfront
    • post to:

      Australian Taxation Office
      PO Box 3000
      PENRITH NSW 2740

    If you lodge via the Tax Agent Portal, you will receive an instant receipt and your application will be dealt with faster than if lodged by post.

    Find out more

     

    For more information about non-commercial losses, refer to Guide to non-commercial losses.

    End of find out more
    Last modified: 05 Nov 2014QC 19150