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Edited version of private advice
Authorisation Number: 1051936883063
Date of advice: 21 February 2022
Ruling
Subject: 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 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-XX 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 do not satisfy the <$250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
You carry on a Y business.
You traded in the 20XX-XX financial year.
In the 20XX-XX financial year special circumstances impacted the profitability of your business activity.
Your business was impacted in the following ways:
• Covid19 prevented you from operating for periods of time, resulting in decreased revenue
• ill health resulted in absences from the business and having to hire other staff at additional cost.
Your business has previously produced a profit.
Your business met at least one of the four non-commercial loss tests and it was expected, if not for the special circumstances, your business would have made a tax profit in the 20XX-XX financial year.
You intend to return to profit in the 20XX-XX financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 35-55(1)(a)
Income Tax Assessment Act 1997 subsection 35-10(2E)