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Edited version of private advice
Authorisation Number: 1051913982958
Date of advice: 23 October 2021
Ruling
Subject: Non-commercial business 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 the calculation of your 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 meeting one of the four tests. Consequently, the Commissioner will exercise his discretion in the 20XX financial years.
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 satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997.
You conduct a business of XX which commenced in the 20XX financial year.
In the 20XX financial year special circumstances impacted your business activity.
Your business was impacted in the following ways.
• The XX, for which your consultancy services relate to was cancelled due to the COVID-19.
• As a result, you did not receive any income for your XX services.
Your business has previously met the assessable income test.
It was expected that if the XX was not cancelled due to the COVID-19, your business would have met the $20,000 assessable income test.
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)