The Council of Small Business Organisations Australia (COSBOA) says proposed loss carry-back reforms should benefit all small businesses, not only those operating through company structures.
In a supplementary submission to the Senate Economics Committee, COSBOA supports the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 and its objective of improving cash flow for businesses experiencing difficult trading conditions. However, COSBOA says the measure should be expanded so trusts, partnerships and sole traders can also benefit.
COSBOA Chief Executive Officer Skye Cappuccio said the proposed reforms recognised the importance of helping businesses recover from losses, but many small businesses would miss out under the current design.
“We support the intent of these reforms. Our concern is that the benefits should be available to all small businesses, regardless of how they are legally structured,” Ms Cappuccio said.
“Many Australian small businesses do not operate as companies. Family businesses commonly use trust structures, while many others operate as sole traders or partnerships.
“Businesses facing the same economic circumstances should have access to the same support. Tax settings should reflect the diversity of Australia’s small business sector, rather than favouring one business structure over another.”
COSBOA’s submission notes that the measure, as drafted, does not reach many small businesses. Trust losses are trapped in the trust, sole traders and partners have no carry-back facility, and companies that distribute profits to support working owners may receive limited benefit.
COSBOA recommends that, after current-year tax relief has been applied, genuine business losses that cannot otherwise be used should be able to be carried back against tax previously paid by small businesses operating through trusts, partnerships and sole trader structures, using existing taxation reporting mechanisms.
The submission also recommends that, if these changes cannot be incorporated into the current legislation, the Government commit to consulting on extending loss carry-back to non-corporate small business structures as a priority.
“Our submission provides a practical pathway that builds on existing tax administration processes,” Ms Cappuccio said.
“We look forward to working with Government, Treasury and the Australian Taxation Office to ensure this important reform supports the broadest possible cross-section of Australia’s small business community.”
Read COSBOA’s submission here: COSBOA | Supplementary submission – Treasury Laws Amendment (Tax Reform No. 2) Bill 2026. Schedule 1 – loss carry-back: forfeited losses, and access for small business | COSBOA
