The AAT has affirmed the Commissioner’s decision to disallow the taxpayer’s objection to a private ruling. The taxpayer had sought to offset losses from his cattle breeding activities and (apparently) sought a private ruling in relation to the issue of whether the Commissioner should exercise his discretion under s 35-55(1) of the ITAA 1997 to the application of the non-commercial loss rule restrictions because of special circumstances. The Commissioner ruled that he was not prepared to do so on the basis of the facts outlined in the ruling. The taxpayer unsuccessfully objected to the ruling.
Before the AAT, the taxpayer sought to introduce additional factual material to the effect that he was operating 2 separate primary production activities – namely, a cattle breeding and stud operation and that the stud operation had only begun in the previous 5 years and that the new evidence he was to introduce would show there was an 8 year lead time before profits were made from such activities. He therefore argued that the Commissioner should have exercised the discretion favourably in respect of this activity (notwithstanding that the breeding activities had been carried on at a loss for some 23 years).
The AAT dismissed the taxpayer’s application on the basis of finding that his original enquiry was in fact a private ruling request (contrary to his claim before the AAT). As a result, the AAT ruled that the Commissioner was correct that no new factual material could be introduced in contesting the objection decision on the private ruling (as the new evidence would result in an unacceptable material change to the facts ruled on). In any event, the AAT indicated that even if the new material was admissible, it would not have been clear whether it would have established that the taxpayer was carrying on 2 separate activities.
(AAT Case [2012] AATA 695, AAT, Ref No: 2011/5509, McCabe SM, 21 September 2012.)
[LTN 198, 12/10]