Changing a loss carryback decision
The proposed modification to allow a loss carry back choice to be amended becomes law on December 7, 2021. To change a loss carry back option, an organisation must notify the Commissioner using an approved form within the restricted modification period.
More information regarding the authorised form, as well as how to amend a selection, will be available on our website soon.
The Australian Government declared on 11 May 2021, as part of the 2021–22 federal Budget, that the loss carry back policy will be extended. When filing their 2022–23 tax return, qualified corporate organisations will be able to roll back tax losses from the 2022–23 fiscal year to balance previously taxed gains as far back as the 2018–19 fiscal year.
This extension is not yet in effect.
The Australian Government declared on October 6, 2020, as part of the 2020–21 federal Budget, that it will target support to businesses and promote new investment through a loss carry back system. Eligible corporate entities that had an income tax liability in the relevant year and afterwards generated taxable losses can claim a refundable tax offset up to the extent of their previous income tax liabilities.
The measure connects with the announcement about the JobMaker Plan — temporary full expensing to stimulate investment. This will allow for considerable tax losses to be generated by new investment, which can then be carried back to create cash refunds for eligible enterprises.
Eligible corporate organisations with less than $5 billion in turnover in a relevant loss year can apply losses from the 2019–20, 2020–21, and 2021–22 tax years to a preceding year’s income tax due in the 2018–19, 2019–20, and 2020–21 tax years.
The tax offset is limited by the corporate entity’s income tax liabilities in the relevant gain years and its franking account balance at the end of the year in which the corporation files its tax return claiming the loss carry back tax offset (that is, in the 2020–21 or 2021–22 income year).
The law went into effect on January 1, 2021. Corporate entities that qualify may claim the tax offset on their tax returns for the fiscal years 2020–21 and 2021–22.
Further information about this measure, including how to claim the tax offset, can be found in the applicable corporate tax returns.
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