As announced in the 2020/2021 Federal Budget, legislation has now passed to allow eligible corporate entities (i.e., those with, amongst other things, an aggregated turnover of less than $5 billion) a 12-month extension to claim a loss carry-back tax offset in the 2023 income year. Eligible entities get the offset by choosing to carry back losses to earlier years in which there were income tax liabilities. The offset effectively represents the tax the eligible entity would save if it was able to deduct the loss in the earlier year using the loss year tax rate. As it is a refundable tax offset, it may result in a cash refund, a reduced tax liability or a reduction of a debt you owe the ATO. For more information on the 12-month extension of the temporary loss carry-back measure, read on!
The temporary loss carry-back rules were initially implemented in 2020 to promote economic recovery by providing cash flow support to previously profitable companies that fell into a tax loss position due to the COVID-19 pandemic.
The law allows eligible companies to carry-back tax losses from 2020, 2021, 2022 and now the 2023 income year to previously-taxed profits in the 2019 or later income years.
A company that does not elect to carry back losses under this temporary (yet extended) measure is still eligible to carry losses forward as usual.
Entities can use the loss carry back tax offset tool to work out if they are eligible to claim the refundable tax offset. It also calculates the maximum amount they can choose to claim if they are eligible. Alternatively, the friendly and knowledgeable team at DGL Accountants are here to assist you, please contact us should you wish to discuss the loss carry-back measures in relation to your personal taxation affairs.
Ref: Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021