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Edited version of private advice
Authorisation Number: 1051928875835
Date of advice: 2 December 2021
Ruling
Subject: Commissioner's discretion - non-commercial losses
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 and 20XX financial year
This ruling applies for the following:
XXXX financial year
Relevant facts and circumstances
You carry on a XX business. You commenced business operations in XXXX of the 20XX financial year.
COVID-19 restrictions impacted the profitability of your business activity.
Your business was impacted in the following ways:
• The prolonged lockdowns affected the main target markets; businesses operating in the hospitality and tourism industries, corporate customers, international and local tourists.
• The COVID-19 impact also had an impact on the automotive sector, there was a shortage of vans and cars available for sale. This caused a delay as to when you could commence the XXXX business and consequently the turnover as projected.
You intend to make a tax profit from the 20XX financial year.
You do not satisfy the $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
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)