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Edited version of your written advice
Authorisation Number: 1051235112869
Date of advice: 7 June 2017
Ruling
Subject: Non-commercial business losses and grouping like business activities
Question 1
Can you group your two partnership business activities for the purpose of subsection 35-10(3) of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer
Yes.
Taxation Ruling TR 2001/14 considers the operation of Division 35 of the ITAA 1997, and states at
paragraph 86:
Subsection 35-10(3) allows business activities to be grouped for Division 35 purposes, where they are activities 'of a similar kind'. A similar activity may be one that has evolved from the first business activity, or it may simply be another business activity carried on in the same year, that fits the description of being 'similar'.
In your case, it is considered that the two partnership activities that were operating in the 20XX-YY financial year are of a similar kind, and are able to be grouped together under subsection 35-10(3) of the ITAA 1997.
This ruling applies for the following period:
Yeah ended 30 June 20YY
The scheme commences on:
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 do not satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
You operate a primary production activity (the activity).
You have operated the activity under a partnership arrangement (partnership A).
Partnership A has been profitable in prior years.
The activity underwent a restructure during the 20XX-YY financial year, with a new partnership (partnership B) commencing in 20YY.
For the 20XX-YY financial year, due to the planting and harvesting seasons in your region, all income was earned by partnership A and all related expenses were incurred by partnership B.
However when the two partnership activities were grouped together, there was an overall net operating profit for the activity.