Page 7 - RSM Budget 2020 Highlights

CORPORATIONS AND BUSINESSES

Loss Carry-back Relief
Current

Qualifying deductions i.e. current year unabsorbed
capital allowances and trade losses, for a YA may be
carried back to offset against the assessable income
of a taxpayer for the immediate preceding YA,
capped at $100,000 of qualifying deductions and
subject to conditions.

Proposed changes
The carry-back relief scheme will be enhanced for YA
2020. Under the enhanced scheme, qualifying
deductions for YA 2020 may be carried back up to
three immediate preceding YAs, capped at $100,000
of qualifying deductions, and subject to conditions.

Taxpayers may elect to carry back to the relevant
preceding YAs an estimated amount of qualifying
deductions available for YA 2020, before the actual
filing of their income tax returns for YA 2020.

IRAS will provide the details of the change by end-
March 2020.

Effective date
The carry-back relief scheme is enhanced for YA
2020 only.

Comments
 The proposed enhancement helps businesses in
easing their cash flow and lightening their tax
burden in light of the current crisis. Such benefit
however only accrues to companies which
have chargeable income in the three immediate
preceding YAs.

 By allowing taxpayers to elect and carry back
an estimated amount of available qualifying
deductions before the actual filing of the YA
2020 income tax returns would help to alleviate
short-term cash flow difficulties.

 Companies must take into account the tax
exemption and corporate income tax rebate for
the respective years so that maximum benefit
may be achieved by carrying back qualifying
deductions to the three immediate prior years.

BUDGET 2020 HIGHLIGHTS | 5