Loss carry-back should be reintroduced

The Institute of Public Accountants (IPA) has urged the Government to reintroduce the loss carry-back initiative that allows companies to clawback their tax paid when they incur revenue loss.

The initiative was introduced in 2012 but was removed a year later, and IPA chief executive, Andrew Conway, said with the repeal of the Minerals Resource Rent Tax, the loss carry-back became an instant casualty.

Conway said the initiative gave viable businesses a boost when they needed it the most through more timely tax loss relief.

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"Small businesses operating through companies generally have limited resources to cope with adverse trading conditions and may require short-term liquidity to meet day-to-day liabilities," he said.

"The provisions that were introduced struck the right balance between allowing losses and limiting exposure to government revenues by placing a quantitative cap in conjunction with a two-year carry-back period."

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