24/03/2009 - 11:06

US policy changes could help local SMEs

24/03/2009 - 11:06

Bookmark

Save articles for future reference.

Deloitte has urged the federal government to adopt recent changes to US business policies that could throw a cash lifeline to struggling businesses during the current economic climate.

US policy changes could help local SMEs

Deloitte has urged the federal government to adopt recent changes to US business policies that could throw a cash lifeline to struggling small to medium enterprises during the downturn.

 

The announcement is below:

 

The recent amendments to the US provisions allowing companies to carry back losses would help preserve businesses and jobs in Australia if also introduced in this country, according to Craig Holland, a Tax partner with professional services firm Deloitte.

In the US, small businesses with deductions exceeding their income in 2008 can now use a new net operating loss tax provision to get a refund of taxes paid in prior years. The carry back provisions apply to two years but this has recently been extended to five years.

Mr Holland said that currently in Australia, companies are not allowed to carry back losses.

"For example, if a company makes a taxable profit in its first two years of operation and then a tax loss in year three, the company has to carry the loss forward to potentially offset it against future profits," said Mr Holland

"In the US, however, it would be allowed to go back and amend the prior years and claim the loss enabling a cash refund."

Given the current economic conditions, if the Government was to introduce a similar provision in Australia, this would throw a lifeline to struggling businesses by providing them with a quick injection of cash.

"While the issue of loss carry backs has been raised before, it needs to be brought to the forefront of discussion again given its importance as an effective way of assisting struggling businesses in the current economic climate," Mr Holland concluded.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options