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Edited version of private advice
Authorisation Number: 1051845777223
Date of advice: 29 May 2021
Ruling
Subject: Non-commercial losses - special circumstances
Question
Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your medical business activity in your calculation of taxable income for the income years ended 30 June 20XX and 20XX?
Answer
Yes. Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted that your business activity was affected by special circumstances, namely COVID and a medical condition, outside your control which prevented you from making a profit. You had decreased income from COVID restrictions preventing numerous procedures from being performed and increased costs of Locum fees after suffering a medical condition in 20XX and being unable to perform some procedures yourself. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au.
This ruling applies for the following periods:
Income year ended 30 June 20XX
Income year ended 30 June 20XX
The scheme commences on:
DDMMYY
Relevant facts and circumstances
You conduct a medical business in regional Australia as a sole trader.
You have an associated service trust which employs X people.
During the 20XX and 20XX income years COVID restrictions prevented numerous procedures from being carried out and has therefore reduced income
You also suffered a medical condition in 20XX which reduced your income and increased the costs of employing locums for work you were unable to complete yourself.
You pass the assessable income test, profits test and Other assets tests.
You do not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
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)(a)
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