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Edited version of private advice
Authorisation Number: 5010106453621
Date of advice: 12 September 2024
Ruling
Subject: Commissioner's discretion - income requirement not met
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 business activity in your calculation of taxable income for the 20XX-XX to 20XX-XX financial years?
Answer
Yes.
Having regard to your full circumstances, it is accepted that it is the nature of the business activity that has prevented you from making a tax profit. It is also accepted that you make a tax profit within the commercially viable period for your industry. Consequently, the Commissioner will exercise his discretion in the 20XX-XX to 20XX-XX financial years.
This ruling applies for the following periods:
1 July 20XX to 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 are a partner in a primary production business of cattle farming with your spouse.
You commenced your business activity on a specified date.
You and your spouse operate the partnership and provided us with the partnership split.
You made a substantial initial investment in the business.
You intend to build a profitable breeding herd of around a specified number of cows over the next 3-5 years.
You provided us with details on your heads of cattle for 2 financial years.
You provided us with a copy of your projections for 5 financial years.
You have provided independent evidence that attests to a commercially viable period of 3 years for your industry.
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)(c)