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Edited version of private advice
Authorisation Number: 1051968333143
Date of advice: 1 April 2022
Ruling
Subject: Commissioner's discretion - non-commercial losses
Question
Will the Commissioner exercise the discretion in section 35-55 of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from business activity in the calculation of your taxable income for the relevant income years?
Answer
Yes. Having regard to your full circumstances, it is accepted that your business activity was affected by special circumstances outside your control. It is also accepted that, but for special circumstances you would have made a tax profit. Consequently, the Commissioner will exercise his discretion.
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 are an Australian resident for tax purposes.
You satisfy the under $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
You carried on a business activity.
You commenced business operations in the stated income year.
In the stated income year COVID-19 impacted your business activity.
Your business was impacted in the following ways:
• Imposed COVID-19 lockdown restrictions in City A did not allow weddings (only in very limited circumstances) that resulted in your customers cancelling their orders.
• You attempted to sell the products when they arrived but were unable to due to the long COVID-19 lockdown.
You refunded back to your customers their deposit when they cancelled their orders.
When the business products got old and/or out of fashion you sold them cheaply or you donated them to charity.
You advised us that if you had not been impacted by COVID-19 then you would have reported at least assessable income of $20,000.
You provided us with tax invoices worth a specified amount for the 20XX income year.
You provided us with invoices for your suppliers.
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)