The Australian Treasury has issued a draft law on the reform, namely the rules in respect of incurring losses by the company.
Treasury said that the reforms would “stimulate entrepreneurship allowing loss-making enterprises to seek new opportunities to return to profitability.”
The proposed measures are part of a government program aimed at innovation and science.
In accordance with current regulations, the Company has the right to use the losses over the past year to reduce taxable income provided that retained the same interest from the date of loss. New developments allow the company to use the losses of previous years to reduce taxable income but during this period the company may not conclude new transactions or types of business activities. This will allow companies to adapt and change their business.
Commenting on the draft legislation, Mark Molesworth, said that while these measures are a step in the right direction but problems still remain.
He explained: “This bill is very restrictive and can cause suffocation introduction of innovation in order to provide access to the existing losses and will also require significant compliance costs in relation to such companies but they may not have the desired effect.”.
The government says that the new legislation should be based on such factors: the extent to which the same assets are used by the company to make a profit; the extent to which the company continues to receive income from the same source; whether the expected changes in the company.
Molesworth said: “In particular, the requirement of expected changes in the company will be quite expensive and time consuming to collect evidence by the Australian Taxation Office.”