Finance Minister Grant Robertson says the Government has no plans to extend a temporary tax rule change made last year to support businesses’ cashflow.
National is calling for the Government to extend the Covid-19 temporary loss carry-back scheme.
Under the scheme, businesses expecting to make a loss in either the 2020 year or the 2021 year can use that loss to offset profits they made the year before. In other words, they can carry the loss back one year to the preceding income year. This can be done before the loss year return is filed.
National wants the scheme extended to the 2022 financial year, so businesses that record losses due to the ongoing impacts of Covid-19 can continue to offset their losses.
It also wants to allow these losses to carry back up to four years.
Robertson said making the change wasn’t something the Government was considering.
He said take-up of the scheme hadn’t been particularly large to date, and an extension wasn’t something he’d heard a “great clamour” for from businesses.
However, he said: “As we’ve shown throughout Covid, we’ll always adapt and change our policies.”
National Associate Revenue spokesperson Simon Watts said, “Last time round State-Owned Enterprises took up a large slice of the scheme. A National Government would exclude State-Owned Enterprises from the scheme so that support could be focused to where it’s needed most.
“Money in the pockets of these businesses is the best way to make sure they can continue to trade, support their employees and pay fixed costs such as rent. Right now, they’re struggling to do this.
“Small businesses are particularly bearing the brunt of this most recent lockdown and many face closure if the Government doesn’t come to the table with extra support.”
Chartered Accountants Australia New Zealand tax leader John Cuthbertson said extending the loss carry-back scheme to 2022 would help some businesses.
Like Robertson, he noted take-up of the existing scheme had been limited. But he maintained an extension would be useful in adding another tool to the toolkit of support for businesses.