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Edited version of private advice
Authorisation Number: 1051605043851
Date of advice: 5 November 2019
Ruling
Subject: Commissioner's discretion for special circumstances
Question
Will the Commissioner exercise the discretion to allow you to include any losses from your primary production business in the calculation of your taxable income for the 20XX-XX financial year?
Answer
Yes.
Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted that your business activity was affected by special circumstances outside your control which caused you 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 period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You live on a property with over X acres cleared grazing land, about X acres of that is arable. It was purchased in 20XX and you moved onto it at that time.
At this time you started your primary production business. The farm has been operated by you and involves breeding and fattening animals and selling the meat.
In the 20XX-XXfinancial year you purchased about X pregnant animals and then another X. You bred about X of your own animals; you also purchased X animals off your parents to bring your total numbers to above X head including X young.
The drought commenced in your area in June 20XX.
Due to drought conditions and a lack of feed, many animals have died, less hair has been cut and there has been a large reduction in reproduction.
In the 20XX-XX financial year there were only X births and about X deaths. This was roughly $X loss in animals. Of the X young birthed in the 20XX-XX financial year only X are still alive. Your stock is currently at around X animals plus X young.
The deaths also represented around $X loss in shearing production for the 20XX-XX financial year.
In the 20XX-XX financial year you did not meet the any of the tests.
Searing and meat sales would have given a total income of $X in a normal year. This is based on having X head and X young being born each year, sales for meat of about X per annum, and shearing being done twice a year which is calculated at $X per head.
Given the calculations above, if not for the drought you would have met the assessable income test in the 20X-XX financial year.
Your income for non-commercial loss purposes in the 20XX-XX financial year was more than $40,000 but less than $250,000.
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 paragraph 35-55(1)(a)