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Edited version of your written advice
Authorisation Number: 1051317394634
Date of advice: 6 December 2017
Ruling
Subject: Non-commercial losses and the Commissioner’s discretion
Question
Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your primary production business in the calculation of your taxable income for the 2015-16 to 2016-17 financial years?
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 for the 2015-16 to 2016-17 financial years.
For more information on non-commercial losses, please visit our website www.ato.gov.au and enter quick code “QC 33774” in the search area at the top of the page.
This ruling applies for the following periods:
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commences on:
1 July 2015
Relevant facts and circumstances
You satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
You have been carrying on a primary production hobby activity for a number of years.
You gradually increased your herd of cattle and it is from this point you considered that you were carrying on a business of cattle breeding.
You plan to increase the herd of cattle to XX by the XXXX-XX financial year.
You advise there is a minimum two year period from heifer calves being born and producing their first calf.
You have incurred losses for the XXXX-XX and XXXX-XX financial years.
You have provided a projected profit and loss statement to confirm that the business will pass the assessable income test in the XXXX-XX financial year. The business will also be profitable in the same 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)
Income Tax Assessment Act 1997 paragraph 35-55(1)(b)