Tax Losses Carry Back

UPDATE: Tax loses carry back legislation was repealed on 5 September 2014 with retrospective effect from 1 July 2013. This means that companies can only claim the tax losses carry back for the financial year ending 30 June 2013. The link below provides details of the decision to repeal losses carry back and other taxes.

https://www.ato.gov.au/General/New-legislation/In-detail/Other-topics/Repeal-of-MRRT-and-related-measures/Company-loss-carry-back-repeal/

Below is a brief explanation of tax loss carry back

Prior to 01/07/2012, companies that made a tax loss had to carry the tax loss forward to deduct against income from future years. From 01/07/2012, this will no longer be the case.

Instead, companies can claim up to $300,000 as a refundable tax offset for up to two years.

In FY2013 the loss carry back is $270,000 which is calculated as the lower of the followings:

  1. Franking account balance at the end of FY2013 ($270,000)

  2. The loss carry back tax offset using the method statement of $330,000 [($1200,000 tax loss in 2013 - $100,000 exempt income) x 30% tax rate]

  3. $1,000,000 multiplied by the corporate tax rate of 30% in the loss year ($300,000)

Please note that

  1. In FY2013, you can only claim loss carry back against tax paid in FY2012.

  2. Tax loss carried forward in 2013 is $200,000 [$1,200,000 - $100,000 exempt income - ($270,000 loss carried back divided by corporate tax rate of 30%)]

In FY2014 the Losses carry back is calculated as $180,000 which is the lower of the followings:

  1. Franking account balance at the end of FY2014 ($350,000)

  2. The sum of the loss carry back tax offset of the FY2013 and FY2012 of $180,000 ($200,000 losses carried forward + $500,000 losses in FY2014 - $100,000 exempt income)

  3. $1,000,000 multiplied by the tax rate in FY2014 ($300,000)

Click on the link to find out more when you are eligible for superannuation guarantee. https://www.ato.gov.au/Business/Employers-super/Working-out-if-you-have-to-pay-super/Employee-eligibility/

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