Loss Carry Back Tax Offset

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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. 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. The choice to carry back tax losses may result in a tax refund which will increase business cash flow.

If there is any more information that you may require, please do not hesitate to get in touch with a member of the Arum team!