With the 2013 financial year well into its second half, it is timely to remind small business owners who may be experiencing a difficult year that in the 2012-13 Federal Budget, the government announced its intention to provide tax relief for companies by allowing them to carry-back tax losses so they receive a refund against tax previously paid.
A one-year loss carry-back will apply in 2012-13, where tax losses incurred in that year can be carried back and offset against tax paid in 2011-12!
For 2013-14 and later years, tax losses can be carried back and offset against tax paid up to two years earlier.
Loss carry-back will:
- be available to companies and entities taxed like companies who elect to carry-back losses
- be capped at $1 million of losses per year
- apply to revenue losses only
- be limited to the company’s franking account balance.
We will be contacting all our small business clients in the lead up to 30 June in order to consider any year end tax planning and to budget for their likely income tax obligations for the 2013 year. So of course we will be taking into account these new measures where possible.
However if you feel you may need to take advantage of these rules and would like to discuss it further (perhaps to help reduce PAYG Instalments) please let us know?