The Government will amend the company tax loss recoupment rules to ensure they interact appropriately with recent reforms to the regulation of the medical indemnity industry, Minister for Revenue and Assistant Treasurer, Senator Helen Coonan, announced today.
"These measures will provide medical defence organisations with certainty about their capacity to deduct legitimate business losses, protecting their liquidity and capital reserves", Senator Coonan said.
The amendments will ensure that the same business test will not be failed merely because a medical defence organisation (or associated captive general insurance company) restructures the way it provides medical indemnity cover (or ceases to provide such cover) prior to 1 July 2003 in order to satisfy the requirements of the Medical Indemnity (Prudential Supervision and Product Standards) Act 2003.
In addition, the Government will make two complementary amendments.
Legislation currently before Parliament, Taxation Laws Amendment Bill (No. 5) 2003, will amend the tax loss recoupment rules to ensure that companies are not prevented from accessing the same business test because they cannot determine a date on which the continuity of ownership test was failed.
The first amendment will be made to ensure these new rules on accessing the same business test will apply, as intended, to companies limited by guarantee and similar kinds of companies that do not have shares.
A further amendment will be made to ensure that tax losses otherwise deducted under established ATO administrative practices applying to the continuity of ownership test will not be denied as a result of the new rules about accessing the same business test. This will ensure companies are not disadvantaged by those new rules.
The Government will consult with industry on the development of these measures to ensure they achieve their objective.