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Edited version of private advice
Authorisation Number: 1051772374243
Date of advice: 28 October 2020
Ruling
Subject: Non-commercial losses - lead time
Question
Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) of the Income Tax Assessment Act 1997 to allow you to include any losses from your farming business in the calculation of your taxable income for the 20XX-XX financial years?
Answer
Yes. Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted there is a 'lead time' in the nature of your business activity and you will pass a test or make a tax profit within your industry's commercially viable period. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au
This ruling applies for the following period:
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
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You and your partner (You) satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997.
On 20XX you acquired a property with the intention of planting trees (trees).
You engaged a consultant to inspect the property to provide advice on the establishment and ongoing operations of the plantation. The consultant provided you a detailed report.
The consultant recommended you place your order for trees as soon as possible due to the strong demand for trees and warned that there could be a delay in delivery.
Following shipping delays trees were delivered on 20XX and planting completed on 20XX.
On 20XX you engaged a grower liaison officer to inspect the trees and provide advice.
You expect to meet the assessable income test at year 6.
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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