Loss carry back unfortunate casualty
The repeal of the Minerals Resource Rent Tax (MRRT) will see the scrapping of the one tangible outcome to emerge from years of government investment in tax reform, including the Henry Tax Review, says the Institute of Public Accountants (IPA).
"The scrapping of the loss carry-back initiative after its short one year life-span is a backward step and can only serve to hurt viable small businesses," said IPA chief executive officer, Andrew Conway, speaking from the IPA's National Congress on the Gold Coast.
The IPA has long advocated for this initiative and we are very supportive of such a measure as part of our tax loss rules. Adoption of the loss carry back measure brought Australia into line with overseas jurisdictions and its removal is a step backwards especially when it has been recommended by the Henry Review.
"The loss carry back changes are mainly intended to give viable small businesses a boost when they need it the most through more timely tax loss relief.
"Small businesses operating through companies generally have limited resources to cope with adverse trading conditions and may require short-term liquidity to meet day-to-day liabilities.
"This had been the major shortcoming of the tax loss treatment rules for small corporate businesses; the inability to claw back previously paid taxes and having to wait to earn profits before they could recoup their tax losses.
"Now, the one tax reform measure to get off the ground is destined to be scrapped due to the MRRT repeal so it really is a matter of back to the drawing board on tax reform.
"We need mature debate to deliver true tax reform that removes inefficiencies in the tax system and delivers tangible benefit that supports the future health and wellbeing of Australia's small business sector," said Mr Conway.
Further details of IPA's National Congress can be found at: /nationalcongress2013