Federal Budget Announcement Allows Businesses to Back-claim for Future Losses

BMT Tax Depreciation welcomes the Government’s decision to allow businesses with an aggregated turnover of less than $5 billion to apply tax losses against taxed profits in a previous financial year, generating a refundable tax offset in the year in which the loss is made.

The initiative, announced in last night’s Federal Budget, allows eligible businesses to carry-back tax losses from the 2019/20, 2020/21, or 2021/22-income years to offset previously taxed profits in 2018/19 or later income years.

The announcement means that businesses with losses in the last financial year or next two financial years can claim a refund from as far back as FY2018/19, rather than the current arrangement of carrying losses forward.

The tax refund would require that the amount carried back is not more than the earlier taxed profits and that the carryback does not generate a franking account deficit.

Expert quantity surveyor and BMT Tax Depreciation CEO, Bradley Beer, said the change should lead to many businesses receiving money back without any additional financial outlay. He suggested that a tax depreciation schedule will assist in recouping the maximum amount.

“There’s always been the ability for individuals to back-claim for two years for amendments, and now the Government has given businesses a way to benefit.”

“For example, a business lodging its FY20/21 tax return can work out its losses, if any, and amend its tax returns going all the way back to FY2018/19. This would result in an immediate reimbursement of tax paid,” said Bradley Beer.

“It’s pretty simple: do your depreciation now, work out your tax loss and amend your prior returns to receive tax you’ve already paid as a refund.”

“A depreciation schedule is the best way to identify all the deductions you can claim from your business’s assets and maximise the potential loss,” he said.

“Businesses should contact a specialist quantity surveyor to conduct a site inspection and compile a list of all of the depreciation deductions available for their circumstances,” concluded Bradley Beer.

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