| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your written advice
Authorisation Number: 1012782186638
Ruling
Subject: Non-commercial losses
Question
Will the Commissioner allow you to include any losses from your business activity in your calculation of taxable income for the 2013-14 financial year?
Answer
Yes
This ruling applies for the following period
Year ended 30 June 2014
The scheme commenced on
1 July 2013
Relevant facts
You meet the income requirement.
You carried on a business.
The business ceased trading partway through the financial year.
Had the business been operating for the full financial year the turnover would have been in excess of $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 subsection 35-55(1)
Reasons for decision
For the 2009-10 and later financial years, Division 35 of the ITAA 1997 will apply to defer a non-commercial loss from a business activity unless:
• you meet the income requirement and you pass one of the four tests
• the exceptions apply
• the Commissioner exercises his discretion.
You pass the Assessable Income test in section 35-30 ITAA 1997 if your assessable income from a business activity for the year is at least $20,000.
The calculation of the assessable income from the activity can involve making a 'reasonable estimate' of assessable income that would have been derived from the business activity if it had been carried on for the whole income year in question (subsection 35-30(b) ITAA 1997).
The assessable income from your business activity would have been at least $20,000, had your activity been carried on throughout the year.
Therefore you pass the assessable income test and therefore can claim your losses in the 2013-14 financial year.