Tax planning and carry-back loss provisions – Are you eligible?
In the 2020-2021 Federal Budget, the government introduced a temporary loss carry back measure. It can be confusing to decipher what this might mean for you and your business. According to the ATO, the loss carry back tax offset allows eligible entities 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.
This measure will be relevant to you if:
- You are a company, corporate limited partnership, or a public trading trust, and
- Your aggregated turnover is less than $5 billion, and
- Across the four years from 2019 to 2022 financial years, you have (or expect to have) one or more tax loss years occurring after one or more years in which income tax was paid