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Edited version of private advice
Authorisation Number: 1051585550400
Date of advice: 26 September 2019
Ruling
Subject: Non-commercial losses - special circumstances
Question
Will the Commissioner exercise the discretion to allow the legal representative to include any losses from the business in the calculation of the taxable income for the XX financial years?
Answer
Yes.
Having considered the circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted that the business activity was affected by special circumstances outside the owner's control which caused them to make a loss. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au
This ruling applies for the following periods:
Year ended 30 June 2017
Year ended 30 June 2018
Year ended 30 June 2019
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
The deceased was carrying on a business activity of breeding livestock.
The deceased started on X-hectares with approximately X livestock.
The business activity grew to more XX livestock, resulting in the deceased leasing additional farm land.
A significant shortage in rainfall during 20XX & 20XX financial years resulted in no grass on the leased property growing and the deceased needed to supplement the feed through purchasing feed.
Bureau of meteorology data shows serious deficiency in rainfall for period.
The deceased was advised by water authority they declare the dam on the leased property to be unfit for consumption by livestock.
The deceased installed kilometres of pipeline to provide suitable water to the property at their own expense. They also employed additional staff to assist with running the water tanks on the property.
The drought continued and with costs escalating the deceased commenced reducing their livestock.
In 20XX deceased's health worsened, culminating in hospitalisation for surgery for a number of weeks. The deceased health continued to worsen resulting in them passing away.
The deceased earned more than $250,000 per year for two of the three financial years.
The deceased satisfied the real property test for the financial years.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 35-1
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)(a)