The Government on Thur 23.8.2012, released for consultation draft legislation and explanatory material to introduce company loss carry-back into the business tax system. The draft legislation has been prepared following consultation on the discussion paper, Improving access to company losses, which closed on 6 August 2012.
As part of loss carry-back, the proposal is that, from 1 July 2012, companies will be able to carry back up to $1m worth of losses to get a refund of tax paid in the previous year. From 1 July 2013, companies will be able to carry back up to $1m worth of losses against tax paid up to 2 years earlier.
The Assistant Treasurer said the draft legislation includes a minor amendment to the definition of “tax benefit” in Pt IVA so it can apply to loss carry-back in the same way as it can for all other deductions. It also includes integrity rules that mirror the rules used for the carrying forward of losses to set out how the rules are proposed to work for loss carry-back.
Some submissions argued for applying different rules for loss carry-back than loss carry-forward, but Mr Bradbury said the consultation did not result in a sufficiently developed alternative. As a result, the Assistant Treasurer said he will also oversee targeted consultation to identify and further develop alternative integrity rules for loss carry-back prior to legislation being introduced into Parliament. If this consultation can identify a simpler approach that adequately addresses integrity risks, the Government will adopt it, he said.
COMMENTS are due by 19 September 2012.
[LTN 163, 23/8]