Under the existing one year loss carry-back relief scheme, any person may carry back their current year’s unutilised capital allowances and trade losses (collectively referred as ‘qualifying deduction’) up to a limit of S$ 100,000, to set-off against assessable income of the Year of Assessment immediately preceding the Year of Assessment in which the qualifying deduction arose. However businesses have to meet the ’substantial shareholding test’ and ’same business test’ in order to qualify for the Scheme.
With the view to help businesses with their cash-flow and aid businesses which are making losses in this recession, the Minister has proposed to temporarily enhance the existing loss carry-back relief scheme for Years of Assessment 2009 and 2010 as follows:
a. Current year’s qualifying deduction will be allowed to be carried back for, up to the immediately preceding three Years of Assessment, from the Year of Assessment in which the current year’s qualifying deduction arose.
b. Order of set-off will be as follows:
o the third Year of Assessment to be adjusted first,
o then the second Year of Assessment and
o lastly the immediate preceding Year of Assessment.
c. The limit of qualifying deduction for carry-back to be increased from S$ 100,000 to S$ 200,000.
With the above it is also proposed that, IRAS will allow provisional claims of tax refunds based on estimated losses (instead of waiting for finalisation of chargeable income and tax assessments)
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