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Edited version of your written advice
Authorisation Number: 1012702465798
Ruling
Subject: Deferred losses
Question 1
Are business losses deferred under the non-commercial loss provisions deductible now that the activity has ceased?
Answer
No.
This ruling applies for the following periods:
Year ended 30 June 2006
Year ended 30 June 2007
Year ended 30 June 2008
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commences on:
1 July 2001
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You were in a partnership with your spouse.
The partnership conducted a primary production activity.
You worked full time in employment and on the farm after work and on the weekend.
Losses accrued from when the activity commenced until the partnership ceased in the 200X financial year.
You have no plans to go back into a primary production activity.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 35.
Reasons for decision
Taxation Ruling TR 2001/14 discusses the issue of deferred losses when a business activity ceases to be carried on. It states, at paragraph 55:
In some cases an individual taxpayer's circumstances may change leaving issues about their ability to deduct the full extent of any loss made. Any amount deferred under subsection 35-10(2) will only be deductible in a subsequent year if the business activity that gave rise to this amount, or one 'of a similar kind', is carried on in that subsequent year. If the activity, or one 'of a similar kind', is never carried on again, the entitlement to deduct the amount will be lost.
In your case, the business activity that gave rise to your deferred losses has now ceased. If this business activity, or one of a similar kind, is never carried on again, you will be unable to claim the losses in the future and they will be lost.
While we appreciate your situation, there is no other discretion available to the Commissioner in Division 35 of the Income Tax Assessment Act 1997 (ITAA 1997) that would allow you to claim your losses in the circumstances you describe.