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Edited version of private advice
Authorisation Number: 1051834626291
Date of advice: 7 May 2021
Ruling
Subject: Commissioner's discretion - non-commercial losses
Question
Will the Commissioner exercise the discretion under section 35-55 of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your primary production business activity in your calculation of taxable income for the 20xx-xx financial year?
Answer
Yes. You have commenced a business of primary production (growing fruit and nut trees). Due to the inherent nature of this activity you anticipate you will not meet one of the four tests set out in sections 35-30, 35-35, 35-40 or 35-45 ITAA 1997 or produce a tax profit until 20xx. Having considered the relevant factors the Commissioner has granted the discretion. Further information on 'Non-commercial losses and the Commissioner's discretion' can be found by searching 'QC 33774' on ato.gov.au.
This ruling applies for the following period:
Year ended 30 June 20xx
The scheme commenced on:
xx/xx/xxxx
Relevant facts and circumstances
You recently started your business of primary production. You have planted a number of varieties of native trees and mixed produce fruit trees. You intend to sell the produce as well as produce goods from your produce such as honey, nut butters, drinking vinegars to restaurants, cafes and other suppliers. You have provided a business plan and forecast which indicates you will meet the assessable income test as set out in section 35-30 ITAA 1997 in 5 years due to the lead time in growing your plants before they become productive.
Your income for non-commercial loss purposes in the previous income year was less than $XXXX.
You purchased farm equipment in the relevant year.
Relevant legislative provisions
Income Tax Assessment Act 1997 - Section 35-1
Income Tax Assessment Act 1997 - Section 35-30
Income Tax Assessment Act 1997 - Section 35-55
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