07 May 12 Government announces loss carry-back initiative
In joint media release No 2012/031, issued 6 May 2012, the Treasurer, Wayne Swan, the Assistant Treasurer and Minister Assisting for Deregulation, David Bradbury, and the Minister for Small Business, Brendan O'Connor, announced that the Government will provide new business tax relief with a loss carry-back initiative.
Currently, businesses are able to carry forward their tax losses to offset future profits and reduce future tax liabilities. This new initiative will allow businesses to also 'carry back' their losses, to offset past profits and get a refund of tax previously paid on that profit.
As part of the loss carry-back, from 1 July 2012, companies will be able to carry back up to $1 million 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 $1 million worth of losses against tax paid up to two years earlier.
The Government will release a Discussion Paper about the introduction of the Loss Carry-back shortly.
This initiative is in addition to other changes aimed at small business:
- From 1 July 2012, small businesses will be able to immediately deduct the cost of any new business assets costing less than $6,500, for as many assets as they purchase. In addition, businesses will be able to write off assets costing more than $6,500 in a single pool (15% in the first year, 30% in each subsequent year).
- Small businesses will be able to also immediately deduct the first $5,000 of a new or used motor vehicle, purchased from 1 July 2012.