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Edited version of private advice
Authorisation Number: 1051689099424
Date of advice: 1 June 2020
Ruling
Subject: Non-commercial losses - Commissioner's discretion
Question
Will the Commissioner exercise his discretion to allow you to include any losses from your primary productionbusiness activity in the calculation of your taxable income for the 20XX-XX and 20XX-XX financial years?
Answer
Yes. Having considered your circumstances and the relevant factors the Commissioner will exercise his discretion. It is accepted that there is a 'lead time' in the nature of your activity and it will make a tax profit within the commercially viable period for the industry concerned. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au
This ruling applies for the following periods
Year ended 30 June 20XX
Year ending 30 June 20XX
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.
On DD/MM/YYY you began to carry on a primary production business.
There is a lead time for the business activity between the commencement of the business activity and the activity producing assessable income.
The business activity made a loss for the 20XX-XX financial year (its first year of operation).
It is expected that a loss will be made in the second year of operation.
You have provided a profit and loss statement projecting that the activity will be profitable in the 20XX-XX financial year (the third year of operation).
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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