| Disclaimer This edited version has been archived due to the length of time since original publication.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: 1051232909708
Date of Advice: 2 June 2017
Ruling
Subject: non-commercial losses Commissioner's discretion for lead time
Question 1
Will the Commissioner exercise the discretion in paragraph 35-55(1)(c) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your animal breeding business in the calculation of your taxable income for the 20XX-XX financial year?
Answer
Yes
Having regard to your full circumstances, it is accepted that it is in the nature of the business activity that has prevented you making a tax profit. It is also accepted that you will make a tax profit within the commercially viable period for your industry. Consequently the Commissioner will exercise his discretion in the 20XX-XX financial year.
For more information on non-commercial losses, please visit our website at https://www.ato.gov.au/Business/Non-commercial-losses/, or search quick code QC 33774 at www.ato.gov.au.
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
XX February 20XX
Relevant facts and circumstances
You do not satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
You commenced the animal breeding activity on a property with your spouse on XX February 20XX.
The property you purchased was run-down, so you have invested a great deal in repairing infrastructure and improving pasture to increase stocking capacity. Planned pasture improvement will take approximately X years.
You began the activity by purchasing a number of cattle in the 20XX-XX financial year, and now have approximately X number of animals and Y number of animals.
You obtained a private ruling in 20XX where the Commissioner exercised his discretion in relation to your animal breeding business losses for the 20XX-XX and 20XX-XX financial years.
The ruling was limited to that period as the business was projected to produce a profit in the 20XX-XX financial year. Although a profit was expected in the 20XX-XX financial year, due to the lead time for animal breeding being X to Y years, a loss was made.
Your business will produce a profit of $X in the 20XX-XX financial year.
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) and
Income Tax Assessment Act 1997 paragraph 35-55(1)(c).