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Edited version of private advice
Authorisation Number: 5010075044758
Date of advice: 17 June 2021
Ruling
Subject: Commissioner discretion- non commercial losses - special circumstances
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 for the 2019-20 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. It is also accepted that, but for the special circumstances, you would have made a tax profit, and you have met, or would have met one of the four tests. Consequently, the Commissioner will exercise his discretion. For more information on non-commercial losses, please visit our website ato.gov.au and enter quick code "QC 33774" in the search area at the top of the page.
This ruling applies for the following:
XXXX to 30 June XXXX
Relevant facts and circumstances
You satisfy the less than $250,000 income requirement set out in subsection 35-10(2E) of the Income Tax Assessment Act 1997.
You conduct a XXXX business activity which commenced in the 2017-18 financial year.
This business activity is online and you buy at wholesale cost from a third party supplier. The supplier then ships the product directly to the customer on your behalf.
Your main suppliers are overseas and your business is completely relying on certain manufacturers. Your marketing activities occur via social media and other programs.
You had proposed business target of XXXX in the XXXX financial year. Customers have delayed or cancelled their orders due to COVID-19. During COVID-19, warehouse and manufacturing plants in the overseas country suspended production.
You have advised that had it not been for COVID-19, the business activity would have been profitable for the 2019-20 financial year and your business has started to grow again in the first half of 2021 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)