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Edited version of private advice
Authorisation Number: 1051797998470
Date of advice: 20 January 2021
Ruling
Subject: Non-commercial losses - lead time
Question
Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your primary production business activity in your calculation of taxable income for the 20XX-XXfinancial years?
Answer
Yes.
Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted there is a "lead time" in the nature of your business activity and you will pass a test or make a tax profit within your industry's commercially viable period. 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 ITAA 1997.
You carry on a primary production business activity.
You commenced business operations in the 20XX-XX financial year.
You have provided independent evidence that attests to a lead time of two to three years for your industry.
You intend to make $20,000 in assessable income in the 20XX-XX financial year.
You signed an agreement with a relevant marketing organisation.
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)(b)