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Edited version of your written advice
Authorisation Number: 1051312988538
Date of advice: 24 November 2017
Ruling
Subject: Non-commercial losses and the Commissioner’s discretion
Question 1
Will the Commissioner exercise the discretion in paragraph 35-55(1)(c) of the Income Tax Assessment Act 1997 to allow you to include any losses from your primary production business activities in your calculation of taxable income for the 2016-17 to 2018-19 financial years?
Answer
Yes.
Having regard to your full circumstances, it is accepted that it is in the nature of the business activity that has prevented you making a tax profit. It is also accepted that you will make a tax profit within the commercially viable period for your industry. Consequently the Commissioner will exercise his discretion for the 2016-17 to 2018-19 financial years.
For more information on non-commercial losses, please visit our website www.ato.gov.au and enter quick code QC 33774 in the search area at the top of the page.
This ruling applies for the following periods:
Year ending 30 June 2017
Year ending 30 June 2018
Year ending 30 June 2019
The scheme commences on:
1 July 2016
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 commenced a primary production business in XXXX.
You began the activity by purchasing and planting a number of trees in the xxxx financial year. You plan to increase the trees in the next financial year. You have also inherited a number older trees which were located on the property; however these trees were in a rundown state and needed to be stag horned.
You advised that there is a lead time of x years from when the trees are planted, to when they will start to bear fruit. As such you expect the activity to incur losses for a number of years.
You have provided a projected profit and loss statement which indicates that the business will be profitable by the XXXX 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)(c)
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