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Edited version of private advice
Authorisation Number: 1051967387732
Date of advice: 1 April 2022
Ruling
Subject: Non-commercial losses
Question
Will the Commissioner exercise 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 primary production business activity in your calculation of taxable income for the 20XX-XX and 20XX-XX financial years?
Answer
Yes. Having considered your circumstances and the relevant factors, the Commissioner has granted discretion. It is accepted that there are special circumstances which will prevent your business activity from making a tax profit in the 20XX and 20XX financial years.
Further information on non-commercial losses can be found by searching QC 33774 on ato.gov.au.
This ruling applies for the following periods:
Year ending 30 June 20XX
Year ending 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
You commenced a primary production activity through a family partnership (the Partnership).
The Partnership is expected to make a loss in the 20XX and 20XX financial years due to a mice plague and significant rainfall in the region.
You estimate that you will not satisfy the less than $250,000 income amount set out in subsection 35-10(2E) of the ITAA 1997 for the 20XX and 20XX financial years.
The Partnership expects to make a profit in the 20XX financial year.
Relevant legislative provisions
Income Tax Assessment Act 1997 Division 35
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 section 35-55
Income Tax Assessment Act 1997 paragraph 35-55(1)(a)