COVID-19 has changed the way in which we live as individuals, operate as businesses and function as economies and societies more broadly. It is critical that Australia’ expenditure on the road to recovery creates inter-generational value to advance Australia’s progress towards sustainable development goals such as a zero emissions economy and focus on education to prepare the population for the future of work. Urgent Government support is also required to enable businesses impacted by COVID-19 to access professional advice in relation to their financial position, viability and recovery prospects.
Since late March 2020, there has been a notable decline in insolvencies compared to the same time last year. Whilst this indicates temporary government measures have been effective, the data and anecdotal feedback from our members also suggests that businesses which would not be viable in the normal course of events (regardless of COVID-19) are deferring external administration. In doing so, these businesses may currently be incurring additional debt owed to their suppliers (other businesses) that may not be recoverable if the business was to enter external administration. CA ANZ encourages the government to give due consideration now to developing a solution to fund the anticipated increase in assetless insolvencies and strongly cautions against the extension of some of the current temporary measures, such as the moratorium for directors from liability over insolvency trading.
Successful businesses have been doing it tough this calendar year. As Australia looks to a road to recovery, those businesses need some support to get back on their feet. A limited loss carry-back for small business could help. The Board of Taxation’s (BoT’s) review of small business tax concessions contains several recommendations to make life simpler for small business. The government should consider adopting a number of those recommendations. It is also time to review tax expenditures to ensure that they are still fit for purpose.