The tax system should provide targeted assistance towards stress points in a business life cycle, according to the Institute of Public Accountants (IPA).

“This is just one recommendation stemming from our Australian Small Business White Paper and would be particularly relevant to the small business sector,” said IPA chief executive officer, Prof Andrew Conway.

“Small business can do it tough at every stage of the business life cycle, including during the start-up phase or during a temporary setback.

“Most tax concessions (excluding the Small Business Capital Gains Tax and refundable R&D concessions) are merely timing benefits that bring forward tax deductions to reduce the amount of tax payable, which –is only useful if the business is in a tax paying position.

“If a small business is at the start-up stage or experiencing a temporary downturn, the bringing forward of deductions may not provide essential cash flow benefits other than more carried-forward losses.

“Loss carry-back for corporate entities is one way the tax system can assist taxpayers to deal with a temporary setback. We will continue to advocate for the loss-carry-back initiative which had a short life but proved beneficial.

“Non-corporate entities, while problematic, may also require similar relief to assist with the survival of viable businesses,” said Prof Conway.

The Australian Small Business White Paper released last month was the output of the IPA Deakin SME Research Centre. For more information, click here.