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Edited version of private advice
Authorisation Number: 1051633292053
Date of advice: 10 February 2020
Ruling
Subject: Non-commercial losses - 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 primary production business in the calculation of your taxable income for the 20XX to 20XX financial years?
Answer
Yes. Having regard to your full circumstances, it is accepted that it is because of the nature of the business activity that you will not satisfy a test. It is also accepted that there is an objective expectation that you will satisfy one of the tests or produce a tax profit within the commercially viable period for the industry concerned. Consequently the Commissioner will exercise the discretion for the 20XX to 20XX financial years.
For more information on non-commercial losses, please visit our website 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 ended 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on
1 July 20XX
Relevant facts and circumstances
You satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
You carry on a primary production business. You commenced the business activity in MM/YYYY.
During the first year you cleared the property and prepared it ready for planting.
In MM/YYYY you planted the first patch of trees. In the following year you planted more trees and will plant more trees the year after that.
You obtained an independent view from an agronomist who has inspected the property and advised that the trees that have been planted will come into production in four to five years time and full production will occur about three years after that.
You have provided projected figures which indicate that the activity will become profitable in the XXXX-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)(b)
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