Edited version of private advice

Authorisation Number: 1051932037932

Date of advice: 9 December 2021

Ruling

Subject: Commissioner's discretion for 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 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 meeting one of the four tests. Consequently, the Commissioner will exercise his discretion in the 20XX financial year.

This ruling applies for the following period:

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.

You carry on a XX business.

You commenced business operations in the 20XX financial year.

In the 20XX financial year COVID-19 lockdown restrictions impacted your business activity.

Your business was impacted in the following ways:

•         You were unable to access your studio due to the lockdown restrictions.

•         You were unable to continue manufacturing your trading stock without accessing your studio.

Based on your business plan and financial projections, you expected to meet the assessable income test in the 20XX income year if not affected by COVID-19.

You expect your business activity to meet the assessable income test 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)