Accountants urge income clawback relief
The Institute of Public Accountants is calling for the Government to enable small businesses to clawback revenue losses against a previous year's income.
The Institute of Public Accountants claimed such a measure would provide instant financial relief by allowing small businesses to receive an immediate tax refund to the extent that the company paid tax in the previous year.
"Current tax loss treatment for companies hinders the ability for businesses to adapt and change, which impacts on productivity and employment," Institute of Public Accountants chief executive, Andrew Conway said.
He said that risk-taking, investment and innovation were discouraged under the present rules.
"Small businesses operating through companies tend to experience financial problems as the current treatment of losses restricts business cashflow," Conway said.
"They generally have limited resources to cope with adverse trading conditions, and may require short-term liquidity to meet day-to-day liabilities," Conway said.
He said this was the major shortcoming of the current tax loss treatment rules for small corporate businesses.
Conway said the institute had long advocated for a change in the treatment of tax losses and fully supported the review into the current tax loss rules.
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