This month’s newsletter material was sourced from Thomson Reuters WTB issues on 17 August, 24 August and 7 September 2012.
In this month’s Tax Bulletin we provide an update on the development in tax law changes in respect to the Carry Back Loss Provisions as well as address the key targeted audit compliance focus by the ATO and taskforce groups being created for these audit focus areas.
For further information in respect to any matter raised in this month’s bulletin please contact Tanya Moran (Tax Partner Sydney) or Stephen Smith (Tax Partner Gold Coast).
Development in carry back loss provisions
In regards to the 2012-2013 Federal Budget announcements on 6 May 2012 in particular the Company carry back loss provisions, on 23 August 2012, the Government released for consultation the draft legislation and explanatory material to introduce thee provisions into the business tax system.
The government explained that the introduction of loss carry-back would give currently profitable companies greater certainty that, if they incur a loss from undertaking an investment to adjust to changing economic circumstances, they will be able to utilise that loss. This reduces the asymmetry between the taxation of profits and losses. The Government also stated that restricting loss carry-back to those companies that have recently paid tax would also target the measure to companies that have had a history of being profitable, and would improve companies' cash flow by allowing access to losses in a timelier manner.
From 1 July 2012, companies will be able to carry back up to $1m worth of losses to get a refund of tax paid in the previous year. From 1 July 2013, companies will be able to carry back up to $1m worth of losses against tax paid up to 2 years earlier. The Key features of the draft legislation included;
Under the proposal the maximum loss carry-back tax offset will be the least of the:
The normal loss test rules will apply to a corporate entity will be unable to carry-back an unutilised loss where it fails to satisfy the "continuity of ownership" or "same business" tests of Div 165.
Under this new legislation the continuity of ownership test will be modified so that the ownership test period runs from the beginning of the year the loss is carried back to until the end of the current year. This will provide symmetry between the operation of loss carry-forward and loss carry back, and that the rules apply identically across the test period for both loss carry-back and loss carry-forward.
ATO compliance focus
On 3 September 2012, the ATO issued a release on its current targeted compliance area’s including:
ATO debts and payment arrangements
The Tax Office has confirmed that the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) rates for the 2nd quarter of the 2012-13 financial year (1 October 2012 - 31 December 2012) are:
The Tax Office also says the Interest on Overpayments, Interest on Early Payments and Delayed Refunds Interest rate is 3.62%.
ATO warning - scammers about
The Tax Commissioner Mr D’Ascenzo has provided warning to taxpayers of scammers using fake job advertisements to illegally access people's personal information. The commissioner advised that personal information can be used by scammers to lodge false tax returns in your name, enable use of credits cards and even take out bank loans.
Illegitimate ads are being posted on recruitment websites where people are being asked to provide their TFNs as a part of their job application. In some cases, people have even been offered the advertised position and then asked to provide their TFN and bank account details prior to the employment start date, and after providing this personal information, the job offer is then withdrawn. The ATO said the scams are generally communicated by email or mobile phones.
If you are subject to any ATO scams please notify your tax advisor immediately to report the information to appropriate bodies with the Australian Taxation Office.