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Edited version of private advice
Authorisation Number: 1051962983238
Date of advice: 8 April 2022
Ruling
Subject: NCL - Commissioner's discretion - lead time
Question
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 xxxx business activity in your calculation of taxable income for the 20XX to 20XX income years?
Answer
Yes.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
XX Month 20XX
Relevant facts and circumstances
You initially operated a fruit and crop growing farm. However, due to poor returns and rising water costs, you decided to diversify the farm into growing a different plant, as the product derived from that plant has faced an increase in demand.
You are a shareholder of a farming co-operative and intend on using this membership to sell the product from your plant once it is harvested.
You initially purchased X grams of seeds, and purchased another X grams and X seedlings X months later.
In the first financial year, you purchased seeds, set up the nursery, and prepared X acres of your land for planting the plants once they were of the appropriate size.
Once the X acres was prepared for planting, you transplanted X plants. You reserved approximately X plants for any further losses in the final transplant, and later planted these plants five months later.
As the planted seeds take X months to grow before the first harvest, you are expecting X kg of product per hectare, with an estimated income of $X.
You expect to plant another X plants across another X acres in the following year. Further harvests should happen every X months thereafter and should double to a yield of X kg of product per hectare. The second expected harvest will yield an estimated income of $X.
Your income for non-commercial loss purposes is less than $250,000, but more than $40,000.
You expect to first meet the assessable income test in regard to your business activity in the 20XX financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 35
Income Tax Assessment Act 1997 section 35-10
Income Tax Assessment Act 1997 section 35-30
Income Tax Assessment Act 1997 paragraph 35-55(1)(b)