The number of companies trading at a loss increased in the 2009-10 year, according to the latest figures from the Australian Taxation Office.
The figures come just one day after Australian Securities and Investment Commission figures showed the number of companies entering external administration reached its peak during February 2012, a sign the number of loss-making companies could have increased further over the past two years.
They also appear as the Government considers a recommendation to introduce a “carry back” loss scheme, which would allow small businesses to use profits from previous years to offset a loss.
“I wouldn’t say this is a small increase,” Institute of Chartered Accountants general manager Yasser El-Ansary told SmartCompany this morning.
“Even a fraction of a per cent can mean anything from 5,000 to 10,000 businesses, or more. That’s still plenty of businesses that would have moved from a position of paying tax to making a loss.”
The ATO statistics for the 2009-10 year reveal a trove of details, including that individuals declared a total income of $605.6 billion, up by 3.7% from the previous year. Individuals also claimed $29.7 billion in total deductions, down 6.1% from the previous year.
The company statistics also reveal some sobering figures. Companies reported total income of $2,212 billion, down 2.6% from the previous year.
And the number of non-taxable companies – companies that aren’t making a profit at all – increased by 5.1%. The number of companies trading at a loss increased from 34.7% to 35.1%, an increase of 8,741.
However, El-Ansary points out the data is two to three years old, at a time when the economic climate was “extremely different”.
“Businesses at that time were doing it very tough, compared to the climate we’re in at the moment. Things have improved marginally for small businesses, but during this time it was right at the peak of the fiscal stimulus program.”
Yet company insolvency figures are at record highs, and the Housing Industry Association figures released yesterday showed new home sales are at their lowest in nearly two decades. Collapses remain high in the retail and construction sectors.
El-Ansary says while it’s impossible to know whether the number of loss-making companies has increased in the past two years, the environment remains harsh for SMEs.
“When you look at the insolvency statistics or you go out into the community and talk to small business owners, the picture becomes quite clear.
“People are no longer able to access cheap funding sources. And, unfortunately, it’s very concerning because there is no end in sight for the softness in many of these sectors.”
The ATO figures also reveal some disappointing numbers for property investors. There were 1,751,679 investors declared, equalling out to about one in seven taxpayers. Although the number of losses decreased, there were still $4.810 billion in losses.
The statistics also revealed self-managed superannuation funds paid 70% less tax than the previous year, down from $1 billion to $287 million.