Sun about to set on range of popular tax measures, ATO warns
Accountants should tell clients to act fast on full expensing and loss carry back because their days are numbered.
The ATO is warning accountants to make clients aware that the sun is setting on a range of small businesses schemes and they need to act fast or miss out.
The temporary full expensing program enabled qualified businesses to deduct the cost of eligible depreciating assets first held and used between 6 October 2020 and 30 June 2023.
Firms would also be able to deduct the full cost of improvements made to eligible assets during the period, however the program was limited to businesses with an aggregated turnover of less than $5 billion.
CPA Australia senior policy manager Gavan Ord said while the government’s stop-gap $20,000, one-year instant asset write-off was “better than nothing” it would fail to make up for the loss of full expensing.
“It’s a temporary measure - it should be permanent,” said Mr Ord.
The loss carry back scheme also ends this financial year and would be missed.
The scheme allowed eligible corporate entities to claim a refundable tax offset in their 2020-21, 2021-22 and 2022-23 company tax returns if they made a tax loss in the income years between 2019 to 2023.
The ATO said the program aimed to encourage greater investment which could result in tax losses, with the choice to carry back tax losses to result in a refund to increase a business’s cash flow.
Grant Thornton tax partner Vince Tropiano said he was frustrated to see the government do away with the program while businesses were still facing severe financial challenges.
“Coming out of the whole COVID market, there’s still challenges there,” he said.
“I was disappointed to see the removal of the loss carry back rules, that winds up being 30 June 23. That’s where companies can, if they make current year losses, claim them against other income years over the last three years.”
“I think it’s a useful one to support business.”
One compensation in the budget is the implementation of the lodgment penalty amnesty program.
The ATO said the measure would encourage businesses through their tax agents to re-engage with the tax system and get their obligations up-to-date.
“The amnesty applies to tax obligations, including income tax and business activity statements, that were originally due from 1 December 2019 and 28 February 2022,” said the ATO.
“If those returns are lodged between 1 June 2023 and 31 December 2023, any failure to lodge penalty applying to the late lodgement will be automatically remitted.”
The tax office also clarified that the scheme was only for small businesses that at the time of lodgment had an aggregated turnover of less than $10 million and would not apply to privately owned groups or individuals controlling over $5 million of net wealth.
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