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Edited version of private advice
Authorisation Number: 1051845782960
Date of advice: 31 May 2021
Ruling
Subject: Commissioner's discretion - non-commercial losses
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 retail business activity in your calculation of taxable income for the income year ended 30 June 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 restrictions outside your control which prevented you passing the assessable income test. You had decreased income due to a downturn in sales and were unable to meet the $20,000 assessable income threshold despite exceeding it in the previous 4 years. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au
This ruling applies for the following period periods:
Income year ended 30 June 20XX
The scheme commences on:
DDMMYY
Relevant facts and circumstances
You conduct a retail business as a sole trader.
You earn under $250,000 for non-commercial loss purposes.
Due to the COVID virus and subsequent restrictions, you experienced a downturn in sales.
You were unable to reach the $20,000 turnover for the Assessable Income Test to be met.
Your turnover for the preceding four years was well over $20,000.
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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