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Edited version of private advice
Authorisation Number: 1051612666217
Date of advice: 25 November 2019
Ruling
Subject: Special Circumstances - Drought
Question
Will the Commissioner exercise the discretion to allow you to include any losses from your sheep and cropping farm 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 prevented you from passing a test. 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 satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997.
You operate a primary production business activity in partnership.
The property is located Australia which was obtained through a farm lease.
Your planting in a normal rainfall year would commence from late X to X with the harvest occurring in X to early X of the same calendar year depending on seasonal conditions.
You grow crops.
You received well below annual average rainfall of the application year.
Your business activity has been impacted by less than average opening season rains and extremely dry finishes. This has impacted on the yields per hectare resulting in below average assessable income and subsequently reducing the ability to meet the profits test.
You met the assessable income test in previous financial years.
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)