Edited version of private advice

Authorisation Number: 1051845893260

Date of advice: 31 May 2021

Ruling

Subject: Non-commercial losses - Commissioner's discretion 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 20XX-XX and 20XX-XX financial years?

Answer

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. 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 periods:

Year ended 30 June 20XX

Year ending 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

Your income for non-commercial loss income test purpose exceeded $250,000 in each of the relevant financial years.

You carry on a business of mixed farming operation, growing cereal grains & pulses and breeding & fattening beef cattle since 20XX.

The property, which covers XXXXX hectares, is located in Western Queensland.

The geographical location where the property is located, was declared drought affected by the Queensland State Government from 20XX.

Your business model is based on the business being able to grow XX% of the fodder feed required to feed to cattle, cattle are then sold to market and in years where there is surplus grain, some of the surplus grain will be sold to market.

You made the decision to maintain your breeder heard of XXX cows, rather than selling through the drought years and facing the need to restock at higher prices.

You background roughly XXX cattle solely on grass in the paddock, however, during the drought the traditional feeder steer had to be supplementary fed in the paddock. Supplementary feed was required to bring steers from a weight of XXX kg to feedlot entry rate of XXX kg.

As the business was unable to grow their own crops for fodder, grain was required to be purchased.

The following total grain was purchased during the previous five years:

20XX - XXX tonnes

20XX - XXX tonnes

Jan-June 20XX XXX tonnes

Jul-December 20XX - XXX tonnes

Jan-June 20XX - XXX tonnes

Jul-December 20XX - XXX tonnes

Jan-March 20XX - XXX tonnes

The delivered cost of Sorghum, Barley and Wheat increased significantly during this period.

If it had not been for these circumstances, you expect your business would have made a profit.

You expect the business activity to make a profit 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 paragraph 35-55(1)(a)

Income Tax Assessment Act 1997 paragraph 35-55(1)(c)

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