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June 19, 2018
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Can Your Business Claim the Loss Carry Back Tax Offset?

As part of the Federal Budget 2020-21 and relief measures for Small Business affected by COVID-19, the government announced a loss carry back measure to encourage new investment. The Loss Carry Back Tax Offset works together with the temporary asset expensing measures also announced at the budget.

The new law started on 1 January 2021.

Eligible corporate entities that previously had an income tax liability in a relevant year, and have subsequent losses, can claim a refundable tax offset up to the amount of their previous liability.

The Loss Carry Back tax offset allows eligible businesses that have incurred significant tax losses, to carry these back and apply against previous years tax liability. This may generate cash refunds for eligible businesses.

Who is Eligible?
  1. Your business must be a company, corporate limited partnership or a public trading trust in the income year you want to claim the offset.
  2. The business must have had an aggregated turnover of less than $5 billion.
  3. The entity had an income tax liability for financial years 2019, 2020 or 2021.
  4. The entity subsequently made a loss in financial years 2020, 2021 or 2022.
  5. Your business is up to date with tax return lodgment obligations for the last five years.

You can only claim the tax loss once, in either the 2021 or 2022 financial year, so it’s important to get advice about how and when to apply this measure for your business. To claim the tax offset, the ATO must be notified before lodging the company tax return that year.

There are specific guidelines about eligibility, integrity, and tax offset calculation. Book a time with us here, to review your 2021 tax plan and discuss with you whether you can use the loss carry back measure to benefit your business.

Disclaimer: The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. Taxation, legal and other matters referred to on this website are of a general nature only and are based on Goad Accountant’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Karen Goad
Karen Goad
Owner & Founder of Goad Accountants & BusinessSpark. Karen is a Chartered Accountant and Certified Tax Adviser with over 23 years of experience advising property investors, property developers, veterinarians, small and medium business and helping them get the most out of their business through accurate record keeping, tax advice, KPI monitoring and profit improvement strategies. Goad Accountants also specialises in self-managed super fund administration.

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