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Edited version of private advice
Authorisation Number: 1051893863729
Date of advice: 2 September 2021
Ruling
Subject: Commissioners discretion for 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 business activity in your calculation of taxable income for the 20XX-XX, 20XX-XX and 20XX-20XX financial years?
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-XX, 20XX-XX and 20XX-20XX financial years.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You do not satisfy the under $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
You are a partner in a partnership which carries on a primary production business on x properties.
You commenced business operations in the 19XX-XX financial year.
In the 20XX-XX, 20XX-XX and 20XX-20XX financial years drought impacted the profitability of your business activity.
You would normally have x stock however the figures reduced each year during the drought and you suffered losses over three (3) financial years.
Your business has previously produced a profit.
You intend to return to 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)