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Edited version of private advice
Authorisation Number: 1051739436039
Date of advice: 14 August 2020
Ruling
Subject: Non-commercial losses and the exercise of the Commissioner's discretion due to 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?
Answer
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 do not satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
You commenced your original primary production business operations over xx years ago. The business has expanded in the 20xx-xx financial year when you purchased a property and a number of stock.
You submit that you were affected by special circumstances in the xxxx financial year.
You advise that due to the drought you have experienced additional expenses due to the need to continue purchasing feed.
You state that in the xxxx financial year the region and farm has experienced severe drought. As a result, you have additional expenses due to the constant requirement to feed and maintain the welfare of the livestock.
The additional feed cost due to the drought has caused a loss in the business in the xxxx year.
You will return a profit in the 20xx-xx financial 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)(a)