| Disclaimer You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of private advice
Authorisation Number: 1052094920135
Date of advice: 10 March 2023
Ruling
Subject: Non-commercial losses - Commissioner's discretion - lead time
Question
Will the Commissioner exercise the discretion in paragraph 35-55(1)(c) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow you to include any losses from your primary production business activity in the calculation of your taxable income for the relevant income years?
Answer
Yes.
The Commissioner is satisfied that your activity is carried on as a business. Having regard to your full circumstances, it is accepted that 'because of its nature' the business activity has not made a tax profit or passed on of the four tests. It is also accepted that you will pass one of the four tests or make a tax profit within the commercially viable period for your industry.
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You are a sole trader.
You did not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
You purchased this property which has acreage and a residential home including an old shed.
You commenced a primary production activity.
You are funding this activity with your own salary, savings, and the proceeds from the sale of investments.
You have prepared the land for the primary production activity to ensure the activity can be carried on efficiently.
You plan to continue to improve your property by installing more infrastructure to assist in the activity and purchase a more suitable transport vehicle.
You attend meetings with industry professionals to continue to develop your knowledge.
You have provided an information guide which indicates a recommended lead time for the activity to become profitable.
You have calculated this based on a certain activity size. Currently your activity has exceeded this size.
You expect the primary production activity to report a profit in the 20XX income year.
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)