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Edited version of private advice
Authorisation Number: 1051933502985
Date of advice: 15 December 2021
Ruling
Subject: Non-commercial losses - Commissioner's discretion
Question 1
Will the Commissioner exercise the discretion in paragraph 35-55(1)(b) 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 it is the short lead time that prevented you from meeting one of the four tests. You had only just started the business just prior to the end of financial year. It is also a fact that you made a tax profit and met the $20,000 assessable income test in the following financial year. Consequently, the Commissioner will exercise his discretion for the 20XX financial year.
This ruling applies for the following period:
Financial year ending 30 June 20XX
The scheme commences on:
XX XX 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 just prior to the end of financial year.
You received your first customer order and traded before the end of the financial year. However, the first customer invoice payment was not received until early of the following financial year.
You produced a tax profit and met the $20,000 assessable income test in the following 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)(b)