Edited version of private advice

Authorisation Number: 1051884045640

Date of advice: 17 August 2021

Ruling

Subject: Non-commercial losses - special circumstances

Question

Will the Commissioner exercise the discretion in paragraph 35-55(1)(a) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your primary production 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.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You do not satisfy the income requirement as the sum of the four elements was greater than $250,000.

You have a primary production business which is a drought affected area. The business commenced in several years ago.

The main activity of the business is livestock fattening and growing crops to meet the feeding needs of the livestock throughout the different seasons.

The drought limited the number of livestock the property could run and with limited rainfall and an extended dry season, there were minimal conditions for growing grass. This led to the livestock having to be sold at a lighter weight and a reduced price and are therefore unable to meet the relevant test.

You have provided documents showing your losses for the 20XX-XX income year however it is anticipated that you will make a profit in a few years dependant on there being enough rain.

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 paragraph 35-55(1)(a)