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Edited version of private advice
Authorisation Number: 1051639278882
Date of advice: 05 March 2020
Ruling
Subject: Special circumstances - drought
Question
Will the Commissioner exercise the discretion to allow you to include any losses from your mixed farming business in the calculation of your taxable income for the 2018-19 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 have a mixed farming business activity, growing cereal crops in conjunction with a sheep farming activity and timber production.
In a normal year the planting of a crop A would commence from X resulting in harvest occurring in X of the same calendar year. The potential net sale value of the harvest being $X, for the 2018-19 financial year.
You have a rotational crop B. In a normal rainfall year you would commence sowing from X with the harvest occurring in X/X of the following calendar year. The potential net sale value of the harvest being $X, for the 2018-19 financial year.
You had stocking levels of X head of sheep in the 2018-19 financial year.
You earned $X from livestock sales in the 2018-19 financial year.
Your potential assessable income had drought not impacted your business activity would see you to meet the income requirements in the 2018-19 financial year.
However, due to drought your crops failed so your business activity did not produce assessable income of at least $20,000.
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)