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Edited version of private advice
Authorisation Number: 5010074517645
Date of advice: 11 June 2021
Ruling
Subject: Non-commercial losses - Commissioner's discretion - lead time
Question
Will the Commissioner exercise the discretion to allow you to include any losses from your business activity in the calculation of your taxable income?
Answer
Yes
Having considered your circumstances and the relevant factors the Commissioner has granted his discretion. It is accepted there is a 'lead time' in the nature of your business activity and you will pass a test or make a tax profit within your industry's commercially viable period. Further information on non-commercial losses can be found by searching 'QC 33774' on ato.gov.au
This ruling applies for the following periods:
Period ending 30 June 20XX
Period ending 30 June 20XX
The scheme commences on:
XX Month 20XX
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
Your income for non-commercial loss purposes is more than $250,000.
You carry on a primary production business. The business commenced in Month 20XX.
You applied for lead time for the 20XX-XX and 20XX-XX financial years due to the nature of your activity, with the expectation that you would make a profit in the 20XX-XX financial year.
The property area is XX hectares.
The land on which the business is being conducted had not had any fertiliser or pasture management, or meaningful investment undertaken for over XX years, and requires significant pasture and soil remediation to be undertaken to support a profitable livestock breeding operation. The Business Plan outlines your schedule to re-develop the soil fertility and pasture base.
You have provided a business plan which outlines your schedule to improve the pasture and increase your livestock.
There is an objective expectation, based on a supplied independent report that, in your industry, the accepted number of years before the activity becomes commercially viable is XX - XX years.
Relevant legislative provisions
Income Tax Assessment Act 1997 subsection 35-10(1)(b)
Income Tax Assessment Act 1997 subsection 35-10(2A)(b)
Income Tax Assessment Act 1997 subsection 35-55(1)(c)