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The Government will allow eligible companies to carry back tax losses from the 2020, 2021, or 2022 income years to offset previously taxed profits in 2019 or later income years. The effect of this will be to generate a refundable tax offset and will first be available when lodging the 30 June 2021 tax return.
Currently, companies are required to carry losses forward to offset profits in future years. The new (temporary) loss carry-back measure is designed to promote economic recovery by providing cash flow support to usually profitable companies that have experienced losses due to COVID-19 and other economic factors. Some finer details of this initiative:
Please note that access to the benefits from this concession will not be available until you lodge your 2021 tax return. So even though we believe it is a valuable concession, we would suggest this will not provide immediate stimulus to the economy.
In our opinion you will need to get individual advice regarding this concession, because every business structure and position is different. This is especially so where your group structure includes trusts, as they are not covered by this concession.
In the 2019 financial year:
In the 2020 financial year:
Tax and tax planning can be a complicated and evolving process – it’s important to have an accounting partner who knows the game, is across all legislation and understands your situation and what you want to achieve. If you would like to know more about our tax planning services and how you could reduce your tax exposure, please call our office on (08) 8172 1444 or email our friendly team.
Phillip Cross, Royce Cross Agencies
Rodney Quinn, Quinn Transport