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Edited version of private advice
Authorisation Number: 1052171264576
Date of advice: 21 September 2023
Ruling
Subject: Non-commercial losses - special circumstances
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 20XX-XX 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 from making a tax profit. Consequently, the Commissioner will exercise his discretion in the 20XX-XX financial year.
This ruling applies for the following period:
30 June 20XX
The scheme commenced on:
1 July 20XX
Relevant facts and circumstances
You do not satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the ITAA 1997.
You carry on a business activity which you commenced a significant number of years ago.
In the 20XX-XX financial year COVID-19 travel restrictions affected the profitability of your business activity.
Your business was impacted in the following ways:
• reduction in staff hours due to health concerns, and
• unable to replace staff due to poor job market.
Your business has previously produced a profit every year since commencement and the 20XX-XX financial year was the first financial year for you to incur a loss.
You sold your business towards the end of the 20XX-XX financial 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)