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Carry Back Tax Losses

Historically companies could only carry forward losses, to offset against future years’ earnings. Under new legislation introduced by the Australian Federal Government, losses in 2012-13 can be carried back so you can claim a refund against tax paid in 2011-12. From 2013-14 onwards, tax losses can be offset against tax paid over the previous two years.

Who is eligible to claim?

To carry-back tax losses, you must:

  • be a company, or taxed like a company (e.g. corporate unit trust, corporate limited partnerships, public trading trusts) throughout the year you are claiming the offset and the year you are carrying losses back to
  • have a tax loss in either or both of
    • the current year
    • the income year just before the current year (the middle year)
  • have an income tax liability for either or both
    • the middle year
    • the income year just before the middle year (the earliest year)
  • have lodged all required income tax returns for the current year and each of the five income years before the current year
  • make a loss carry-back choice on your company tax return

How much can you claim?

The loss carry-back tax offset for the income year in which you 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 x the corporate tax rate for the year you make a claim (i.e. a maximum of $300,000 in the 2012-13 income year)
  • your franking account balance at the end of the income year you make a claim (unless your company was a non-resident other than a New Zealand franking company)

If you need further advice, please speak to Michelle Mulligan on 1300 622 422.


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