Updated November 12th 2013

The ATO has announced that they will be writing to a number of small-to-medium size businesses (‘SME ’ = $2m-$100m turnover) in relation to tax losses. There are a number of issues that could affect the ability to utilise carried forward tax losses including a change in ownership in a company or insufficient records. It is important to note that when losses exist records need to be maintained for a period of 5 years after which all the losses were generated over a 7 year period and then recouped over a 3 year period, it would be necessary to keep records for a 15 year period, starting from when the losses first commenced.

A number of these SME entities which had carried forward tax losses in the 2009 year will be provided with letters with educational guidance about common issues associated with losses.

A number of other SME entities that generated, deducted or carried forward significant tax losses in the 2008 or 2009 year will receive letters in which the ATO will seek to verify those amounts through a questionnaire. If you receive such a letter directly please contact us.