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Edited version of your written advice
Authorisation Number: 1051391073745
Date of advice: 29 June 2018
Ruling
Subject: Non-commercial losses and the Commissioner’s discretion
Question
Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your business in your calculation of taxable income?
Answer
Yes
Having regard to your full circumstances, it is accepted that it is in the nature of the business activity that has prevented one of the four tests being passed. It is also accepted that you will pass one of the four tests or make a tax profit within the commercially viable period for your industry.
Consequently the Commissioner will exercise his discretion in the 20XX-XX to 20XX-XX financial years.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
You carry on a business of growing produce which commenced in YYYY.
You currently have a one acre plot planted, and you are aiming to increase your seed stock for the 20XX growing season.
You expect to have a four to five acre plot by the 20XX-XX financial year.
You have incurred significant expenses that relate to your business activity.
You have listed a lead time of five years for your industry, however you have not provided independent evidence that attests to this lead time.
However, whilst you have not provided independent evidence that attests to the lead time of five years, we can confirm that the currently accepted lead time for your industry is three to four years (for a business in your industry to grow and replant seed stock to reach a small commercial crop).
You intend to make $20,000 in assessable income in the 2019-20 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)(b)
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