Regulation Impact Statement – The Treasury
On 6 October 2020, as part of the 2020-21 Budget, the Government announced it will temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid. Normally, businesses would have to return to profit before they can use their losses. However under this measure, losses incurred to June 2022 can be offset against prior profits made in or after the 2018-19 financial year.
Temporary loss carry-back is being proposed in conjunction with temporary full expensing to encourage business investment and to support businesses to withstand and recover from the economic effects of COVID-19.
The Office of Best Practice Regulation (OBPR) assessed the Regulation Impact Statement (RIS) prepared by the Treasury as adequate against the Government’s Regulatory Impact Analysis (RIA) requirements, but not consistent with good practice.
In order to have been consistent with good practice, the RIS would have needed to: more clearly describe the proposed options and their associated integrity issues; and better articulate the impacts of each option in terms of costs and benefits to better enable direct comparisons.
The regulatory costs for this proposal are estimated at $20 million per year. A regulatory offset has not been identified.
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