Edited version of private advice

Authorisation Number: 1051882149676

Date of advice: 06 August 2021

Ruling

Subject: The Commissioner's discretion for non-commercial business losses

Question

Will the Commissioner exercise the discretion to allow you to include any losses from your non-primary production business in the calculation of your taxable income for the financial year ending 30 June 2020?

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 presented you from meeting the assessable income 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:

Financial year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You have a business of operating and maintaining XX vending machines that selling a variety of XX in various business premises in XX.

The first vending machine was installed and commenced operation in the previous financial year. XX machines were installed by the beginning of this financial year. Another XX machines were installed during this financial year.

From XX 20XX, due to the COVID-19 pandemic, staff members of the relevant business premises commenced working from home. It had significant impact on your business revenue, as the number of staff that worked in the premises that would buy the XX heavily reduced.

You have been looking for alternative locations for XX of the vending machines at XX, but this has been unsuccessful as many businesses' premises are experiencing the issue of reduced staff number working in the office.

You provided a profit and loss statement of the business for this financial year, which shows that the business derived assessable income of $XX and expected to record a loss of $XX.

You indicated that the business was expected to meet the Assessable income test (business activity produces an assessable income of at least $20,000), if not affected by the COVID-19 pandemic.

You provided an estimation, which used the average weekly sales figure of the XX machines that operated for the full period of this financial year before the pandemic (July 20XX - XX 20XX) as the base rate, times the actual operation weeks of each machine and reached the estimated revenue $XX that exceeded the Assessable income test threshold $20,000.

Your income for non-commercial loss purposes did not exceed $250,000 in this 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)