Loss carry back provides a refundable tax offset that eligible corporate entities can claim:
- after the end of their 2020–21 and 2021–22 income years
- in their 2020–21 and 2021–22 company tax returns.
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 owing to the ATO.
The eligible entity does not need to amend the earlier income years to claim the offset.
If an entity does not choose to carry back a loss, the loss may be carried forward to use in a later income year.
Loss carry back is intended to interact with temporary full expensing, encouraging new investment which may result in tax losses. Where the choice to carry back tax losses results in a tax refund, this will increase business cash flow.
An exposure draft Bill was released by Treasury for consultation that proposes to allow a loss carry back choice to be amended. See Miscellaneous amendments to Treasury portfolio laws 2021External Link for more information. We will continue to provide updates on this proposed amendment.
Find out about:
- Eligibility for the tax offset
- How to claim the tax offset
- Working out the tax offset
- Paying your liabilities and claiming the tax offset
If youre an eligible corporate entity, find out if you can claim a refundable tax offset for tax losses you made in the 2019–20 to 2021–22 income years.
Last modified: 25 Jun 2021QC 64421
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