August 2013 Newsletter 

In this edition:

Welcome

Legislation Update

Tax Rates Update

First Home and Non-First Home Buyers: What's in it for me?

Loss Carry Back for Companies

Superannuation and Powers of Attorney: Part Three

From the 2012/13 year, companies will be allowed to carry back losses incurred in the current year and apply them against taxable income from previous years.

Effectively, this will allow companies to access the tax benefit of losses sooner, as they will not have to wait until they generate taxable profits at some undetermined point in the future before applying losses.

The key features of the new rules include:
1. Only companies (or entities taxed like companies) will be able to access the new provisions.
2. Companies that can access the provisions will receive a refundable tax offset for the amount chosen to be carried back.

3. The tax offset available is limited to the lowest of the following amounts:

• The tax payable on $1 million of taxable income (effectively $300,000 at the 30% corporate tax rate)
• The balance of the franking account at year end;
• The tax value of the amount of losses chosen to be carried back; and
• The tax liability for the income year(s) the losses are carried back to.

4. Where applicable, companies will be able to choose to carry back losses for the two years preceding the current income year.
While the loss carry-back provisions are available from the 2012/13 year, transitional measures mean that companies will only be able to carry back losses to the 2012 income year in their 2013 tax returns. From the 2014 year, companies will be able to carry back losses for two years (meaning losses from 2012 and 2013 will be able to be accessed in the 2014 tax return).

If you have any questions, or are unsure as to whether the new rules apply to your business, you should contact your Goodwin Chivas & Co advisor.