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Edited version of private advice
Authorisation Number: 1051887530439
Date of advice: 20 August 2021
Ruling
Subject: Commissioner's discretion - non-commercial loss
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 business activity in your calculation of taxable income for the 20XX financial year?
Answer
Yes. Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control and that these prevented you from making a tax profit. Consequently, the Commissioner will exercise his discretion in the 20XX financial year.
This ruling applies for the following period:
1 July 20XX to 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 carry on an XXXX services business
You commenced business operations in the XXXX financial year.
In the 20XX financial year the COVID19 pandemic impacted the profitability of your business activity.
Your business was impacted in the following ways:
• Your clients' ceased engagements with you as a result of the COVID19 pandemic until such point as they had access to cash flow once more
• Your business incurred a loss due to the sharp decline in business.
Your business has previously produced a profit in each of the prior four financial years.
You have indicated you returned to return to profit in the 20XX 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)