The Federal Government introduced a loss carry-back tax offset as part of a number of recovery strategies to address the effects of COVID-19 on business. 2021 is the first year that the scheme can be used.

The loss carry-back measure applies to corporate tax entities that have an aggregated turnover of less than $5 billion in the relevant loss year.

The new offset enables companies, corporate limited partnerships, and public trading trusts to ‘carry back’ tax losses in their 2021 and 2022 tax returns to offset profits and tax paid as far back as the 2019 tax year.

Essentially, if eligible, the loss carry-back measures mean a business can apply for a refund for tax already paid in prior years as a tax offset. However, it only applies to income losses, not capital losses over that time period.

If you are looking for more information, the ATO has produced a short video explaining how the loss carry back measure works here: Loss carry back (viostream.com)

To find out if your business might be eligible, contact your dmca adviser on 08 8272 5620.