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Edited version of private advice
Authorisation Number: 1051967919216
Date of advice: 31 March 2022
Ruling
Subject: Commissioner's discretion - non-commercial losses
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 20YY 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 meeting one of the four tests. Consequently, the Commissioner will exercise his discretion in the 20YY financial year.
This ruling applies for the following period:
Year ended 30 June 20YY
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 hire business for events.
You commenced business operations in the 20WW financial year through a partnership.
In the 20YY financial year COVID-19 impacted your business activity.
Your business was impacted in the following ways:
• Clients have cancelled their bookings with you due to cancelling their events.
• Lockdowns and other restrictions have limited or prevented people from having events, which has reduced the demand for your services.
Your actual business income combined with the income you would have received from cancelled events shows that you would have met the assessable income test if it were not for COVID-19.
Your business has previously met the assessable income test.
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)