The loss carry-back law provides a company with the choice to carry back all or part of a tax loss from an income year, or the previous income year, against their income tax liability in either of the two previous income years.

This allows companies experiencing tax losses to carry these losses back against the tax they previously paid and received a refund by claiming a tax offset – know as a loss carry-baccy tax offset.

Eligibility

To be entitled to the loss carry-back tax offset, you need to meet the following:

be a company, or taxed like a company (such as corporate limited partnerships, corporate unit trusts, or public trading trusts), throughout the year, claiming the offset, are carrying losses back to, have a tax loss in either or both the current year or the income year just before the current year, the company lodged its income tax return for the year, the company was not required to lodge an income tax return for the year, ATO made an assessment of the company’s income tax for the year and make a loss carry-back choice.

How much can be claim?

The loss carry-back tax offset for the income year in which company carry back tax losses is the lowest of:

• the sum of the loss carry-back tax offset components for the earliest year and the middle year
• $1,000,000 multiplies by the corporate tax rate for the year the company make a claim
• company franking account balance at the end of the income year the company make a claim.

There are three types of losses that cannot be carried back:

• capital losses
• transferred losses
• excess franking offsets

Company can not claim a loss carry-back tax offset amount that is more than the company franking account balance.

Company claims the loss carry-back will not affect interest on overpayments and late payments.