Company Loss Carry-back

Existing law

In the 2012–13 federal budget, the previous government announced its intention to provide tax relief for companies by allowing them to carry-back tax losses to receive a refund against previously paid tax. The measure received royal assent on 28 June 2013 and applies from the 2012–13 year.

Proposed law

On 13 November 2013, the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 was tabled in parliament, which includes the repeal of the loss carry-back provisions. When enacted, this legislation will apply to assessments for the 2013–14 income year and later income years.

Administrative treatment

Taxpayers, including those who use early balancing substituted accounting periods, who lodge a company tax return for the 2013–14 income year can self-assess under the existing law. Once the law is enacted, the ATO will amend the company tax return to disallow the claim for the loss carry-back tax offset for the 2013–14 income year. This will result in an increase in the taxpayer’s tax liability.

No tax shortfall penalties will apply and any interest attributable to the shortfall will be remitted to nil.