2012 Tax Changes – The loss carry back
The loss carry-back
The loss carry-back scheme is one of the most anticipated tax changes by SMEs – one of few.
At the moment, businesses can only carry losses forward to offset future income and profits. They can’t carry their current loss back and offset it against past profits.
But under the new scheme, businesses will be able to claim losses of up to $1 million against tax paid in the past two years.
To be eligible, a business needs to have made a profit and then a loss from July 1, 2012. So while that provides some relief for SMEs, it doesn’t mean anything for businesses that have made a loss in the past few years.
Of course, there are a few caveats – businesses structured as partnerships, sole traders and trusts are ineligible.