13. Losses information

Loss carry back rules

Eligible corporate tax entities with less than $5 billion aggregated turnover in a relevant loss year can carry back losses made in the 2019–20, 2020–21 and 2021–22 income years to a prior year's income tax liability in the 2018–19, 2019–20 and 2020–21 income years. See Loss carry back.

You can also use the loss carry back tax offset tool which will provide the labels you need to complete to claim the loss carry back tax offset.

Tax loss amounts you choose to carry back to previous income years cannot be carried forward to a later income year.

Consolidated or MEC groups

Any company that is a subsidiary member of a consolidated or MEC group at the end of 2021–22 is not required to complete U and V and Loss carry back. Other companies, including the head company of a consolidated or MEC group at the end of 2021–22, may need to complete U and V and Loss carry back.

U – Tax losses carried forward to later income years

Write at U the unapplied (undeducted or not transferred) amount of tax losses incurred by the company and carried forward to a later income year under section 36-17 of the ITAA 1997. Exclude any amount of the tax losses carried back to previous income years which has been provided at A, B C, D, E and F in item 13.

If the company is a designated infrastructure project (DIP) entity, ensure the amount of tax losses carried forward to later income years include any uplift amount. Net exempt income (if any) must be taken into account in calculating the amount of tax losses carried forward to a later income year, see sections 36-10 and 36-17 of the ITAA 1997.

Tax losses carried forward may be affected by the commercial debt forgiveness provisions, see Appendix 1.

Under sections 36-17 and 36-55 of the ITAA 1997, a company is, subject to certain limitations, able to choose the amount of prior year tax losses it wishes to deduct in a later year of income from the excess (if any) of its assessable income over total deductions (other than tax losses). Providing choice means that companies can choose not to deduct prior year losses in order to pay sufficient tax to be able to frank their distributions. In certain circumstances, a company is able to convert excess franking offsets into a tax loss for the income year and carry forward the tax loss for consideration as a deduction in a later income year. If the company has excess franking offsets at H Excess franking offsets item 8, calculate the company’s tax loss for the income year under the method statement in subsection 36-55(2) of the ITAA 1997 as follows:

• Step 1: Work out the amount (if any) that would have been the company’s tax loss for the year under section 36-10, 165-70, 175-35 or 701-30 of the ITAA 1997, disregarding any net exempt income.
• Step 2: Divide the amount of excess franking offsets by the applicable corporate tax rate.
• Step 3: Add the result of steps 1 and 2.
• Step 4: Take away the company’s net exempt income (if any).

The result (if a positive amount) is the company’s tax loss for the income year. Include this amount at U with any unapplied tax losses from prior income years.

If you are required to complete a Losses schedule 2022, the amount of the tax losses you show at U Total at item 1 Tax losses carried forward to later income years in part A of that schedule must be the same as the amount you show at U on the Company tax return 2022.

Do not include any net capital losses to be carried forward to later income years at U. Show these separately at V Net capital losses carried forward to later income years item 13 on the Company tax return 2022 and in the CGT schedule, if a CGT schedule is required.

Consolidated or MEC groups

If a head company of a consolidated or MEC group is required to complete a Consolidated groups losses schedule 2022, the amount of the tax losses shown at U Total at item 5 Tax losses carried forward to later income years in part A of that schedule must be the same as the amount shown at U on the Company tax return 2022.

If the company is a subsidiary member of a consolidated or MEC group at the end of the income year, U is not applicable.

V – Net capital losses carried forward to later income years

Write at V the total of any unapplied net capital losses from collectables and unapplied net capital losses from all other CGT assets and events. This information is calculated or transferred from:

• 3B in table 5 and 3A at specified countries of the CGT summary worksheet, or
• A and B in part 3 of the CGT schedule, if a CGT schedule is required.

For more information, see Guide to capital gains tax 2022.

If the company is required to complete a Losses schedule 2022, the amount of the net capital losses shown at V Total at item 2 Net capital losses carried forward to later income years in part A of that schedule must also be the same as the amount shown at V on the Company tax return 2022.

Consolidated or MEC groups

If a head company of a consolidated or MEC group is required to complete a Consolidated groups losses schedule 2022, the amount of the net capital losses shown at V Total at item 10 Net capital losses carried forward to later income years in part A of that schedule must also be the same as the amount shown at V on the Company tax return.

If the company is a subsidiary member of a consolidated or MEC group at the end of the income year, V is not applicable.

Loss carry back labels

A, B, C, D, E and F – Tax losses you choose to carry back

• A – Tax loss 2019–20 carried back to 2018–19
• B – Tax loss 2020–21 carried back to 2018–19
• C – Tax loss 2020–21 carried back to 2019–20
• D – Tax loss 2021–22 carried back to 2018–19
• E – Tax loss 2021–22 carried back to 2019–20
• F – Tax loss 2021–22 carried back to 2020–21

G and H – Tax rate

• G – Tax rate 2019–20
• H – Tax rate 2020–21

I, J and K – Net exempt income

• I – Net exempt income 2018–19
• J – Net exempt income 2019–20
• K – Net exempt income 2020–21

L, M and N – Income tax liability

• L – Income tax liability 2018–19
• M – Income tax liability in 2019–20
• N – Income tax liability in 2020–21

O, P, Q and R – Aggregated turnover  

• O – Aggregated turnover range for 2019–20
• P – Aggregated turnover for 2019–20
• Q – Aggregated turnover range for 2020–21
• R – Aggregated turnover for 2020–21

S – Loss carry back tax offset

Eligible corporate tax entities with an aggregated turnover of less than $5 billion can choose to carry back some or all of tax losses for 2019–20, 2020–21 and 2021–22 to earlier income years in which it had income tax liabilities. The loss carry back offset is a refundable tax offset.

An entity is eligible to claim the loss carry back tax offset for the 2021–22 income year if all of the following conditions are met:

• The entity is a corporate tax entity throughout the loss year and the years the loss is carried back to. An entity is a corporate tax entity if it is a          
  • company
  • public trading trust, or
  • corporate limited partnership.
• The entity was a small business entity or would have been a small business entity if the aggregated turnover limit was $5 billion in the loss year.
• The entity had a tax loss in 2021–22, 2020–21 and/or 2019–20 income year.
• The entity had an income tax liability for 2018–19, 2019–20 and/or 2020–21 income year.
• The entity makes a loss carry back choice in the 2022 Company tax return.
• Any of the following requirements is satisfied for 2021–22 and each of the five income years immediately preceding it          
  • the tax return has been lodged for the year
  • the entity was not required to lodge a tax return for the year, or
  • the Commissioner made an assessment of the entity’s income tax for the year.

The offset that you will be entitled to is limited to the lesser of:

• the tax liability for each year you carry the loss back to
• the surplus in your franking account on the last day of 2021–22.

If you choose to carry back some or all of your tax loss, this amount cannot be utilised again, for example, carried forward to claim against future income.

A, B, C, D, E and F – Tax losses you choose to carry back

• Write at A the amount of tax losses incurred in 2019–20 that the entity is choosing to carry back to 2018–19.
• Write at B the amount of tax losses incurred in 2020–21 that the entity is choosing to carry back to 2018–19.
• Write at C the amount of tax losses incurred in 2020–21 that the entity is choosing to carry back to 2019–20.
• Write at D the amount of tax losses incurred in 2021–22 that the entity is choosing to carry back to 2018–19.
• Write at E the amount of tax losses incurred in 2021–22 that the entity is choosing to carry back to 2019–20.
• Write at F the amount of tax losses incurred in 2021–22 that the entity is choosing to carry back to 2020–21.

The following losses cannot be carried back:

• net capital losses
• tax losses that have been transferred under Division 170-A – transfers of losses within certain wholly-owned groups of companies
• tax losses that have been transferred under Subdivision 707-A – transfers to the head entity of a consolidated group by an entity joining the group
• excess franking tax offsets which have been converted into tax losses (refer to section 36-55).

If you need to complete a Losses schedule 2022, the total of the amount you show at A to F at item 13 on the Company tax return must be included at H Tax losses deducted in part F of the Losses schedule.

If a head company of a consolidated or MEC group is required to complete a Consolidated groups losses schedule 2022, the total of the amount shown at A to F at item 13 on the Company tax return must be included in I Tax losses deducted in part F of the Consolidated groups losses schedule.

G and H – Tax rate

Complete G only if you are choosing to carry back a tax loss from 2019–20.

Write at G the tax rate that applied to you in 2019–20.

Complete H only if you are choosing to carry back a tax loss from 2020–21.

Write at H the tax rate that applied to you in 2020–21.

I, J and K – Net exempt income

If the entity is choosing to carry back a tax loss to the 2018–19 income year, write at I the amount of any unutilised net exempt income that the entity had in the 2018–19 income year.

If the entity is choosing to carry back a tax loss to the 2019–20 income year, write at J the amount of any unutilised net exempt income that the entity had in the 2019–20 income year.

If the entity is choosing to carry back a loss to the 2020–21 income year, write at K the amount of any unutilised net exempt income that the entity had in the 2020–21 income year.

Net exempt income can be derived by subtracting expenditure incurred in deriving exempt income from the amount of all income that is exempt from Australian tax. Net exempt income for an income year is calculated under section 36-20 of the ITAA 1997 and may differ from the amount of exempt income that was shown in that year's income tax return. Do not include an amount of net exempt income that has already been utilised. See subsection 960-20(4) of the ITAA 1997.

L, M and N – Income tax liability

If the entity is choosing to carry back a tax loss to the 2018–19 income year, show at L the amount of income tax assessed to the entity for the 2018–19 income year. This is the amount assessed at T5 Tax payable in the calculation statement of the 2019 Company tax return or the tax liability after any amendments to the 2018–19 income year.

If the entity is choosing to carry back a tax loss to the 2019–20 income year, write at M the amount of income tax assessed to the entity for the 2019–20 income year. This is the amount assessed at T5 Tax payable in the calculation statement of the 2020 Company tax return or the tax liability after any amendments to the 2019-20 income year.

If the entity is choosing to carry back a tax loss to the 2020–21 income year, show at N the amount of income tax assessed to the entity for the 2020–21 income year. This is the amount assessed at T5 Tax payable in the calculation statement of the 2021 Company tax return  or the tax liability after any amendments to the 2020-21 income year.

O – Select your aggregated turnover range for 2019-20

Complete O and P only if you have made the choice to carry back a tax loss from 2019–20.

You will not be penalised for specifying an incorrect category where you make your best attempt to calculate your aggregated turnover.

Write at O the category for your aggregated turnover range for 2019–20. Select a category from the table below based on your aggregated turnover range and write the category code at O. Your aggregated turnover range selected can be either your 2019–20 aggregated turnover or your 2018–19 aggregated turnover. For more information, see Aggregation.

Category	Aggregated annual turnover ranges
A	$0 to less than $7.5 million
B	$7.5 million to less than $10 million
C	$10 million to less than $20 million
D	$20 million to less than $40 million
E	$40 million to less than $50 million
F	$50 million to less than $100 million
G	$100 million to less than $200 million
H	$200 million to less than $300 million
I	$300 million to less than $400 million
J	$400 million to less than $500 million
K	$500 million to less than $600 million
L	$600 million to less than $700 million
M	$700 million to less than $800 million
N	$800 million to less than $900 million
O	$900 million to less than $1 billion
P	$1 billion or over

P – Aggregated turnover for 2019-20

Write at P your actual aggregated turnover rounded to the nearest $100 million if you selected category P (that is, aggregated turnover $1 billion or over) at O or are a significant global entity and completed label O. Your aggregated turnover specified can be either your 2019–20 aggregated turnover (the income year you have carried back a loss from) or your previous year's aggregated turnover, 2018–19.

You will not be penalised for specifying an incorrect amount where you make your best attempt to calculate your aggregated turnover.

Q – Select your aggregated turnover range for 2020-21

Complete Q and R only if you have made the choice to carry back a tax loss from 2020–21.

You will not be penalised for specifying an incorrect category where you make your best attempt to calculate your aggregated turnover.

Write at Q the category for your aggregated turnover range for 2020-21. Select a category from the table at O - Select your aggregated turnover range based on your aggregated turnover range and write the category code at Q. Your aggregated turnover range selected can be either your 2020-21 aggregated turnover or your 2019-20 aggregated turnover. For more information, see Aggregation.

R – Aggregated turnover for 2020-21

Write at R your actual aggregated turnover rounded to the nearest $100 million if you selected category P (that is, aggregated turnover $1 billion or over) at Q or are a significant global entity and completed label Q. Your aggregated turnover specified can be either your 2020-21 aggregated turnover (the income year you have carried back a loss from) or your previous year's aggregated turnover, 2019-20.

You will not be penalised for specifying an incorrect amount where you make your best attempt to calculate your aggregated turnover.

S – Loss carry back tax offset

Use the following method to calculate your loss carry back tax offset. Alternatively, you can use the Loss carry back tax offset tool.  

Loss carry back tax offset tool

Alternatively, use the following method to manually calculate your loss carry back tax offset.

1. For each tax loss that you are carrying back to any earlier income year:
   1. Determine the amount of the tax loss you are carrying back.
   2. Work out the net exempt income, that has not previously been used, in that earlier income year.
   3. Subtract the amount at step 1b from the amount at step 1a.
   4. Multiply the result from step 1c by your tax rate for the income year in which you made the loss.
2. If more than one tax loss is being carried back to the same earlier income year, add the step 1d results together. The amount you can claim is capped at your unused income tax liability for that earlier income year. The unused income tax liability is the tax liability for the earlier income year less any amount that was claimed against that liability for a loss carry back claim in the Company tax return 2021.
3. If you are carrying back losses to more than one earlier income year, apply steps 1 and 2 for all years the losses are being carried back to and add the results together.
4. If the amount calculated under step 3 is greater than your franking account surplus at the end of the income year in which you are claiming the tax offset, your offset is limited to your franking account surplus. Otherwise, the amount of your tax offset is the amount calculated under step 3.
   Note: This step does not apply if you were a foreign resident (other than a New Zealand franking company) for more than half of all years that you are carrying losses back to.
5. Record the result from step 4 at S and include this amount in the Calculation statement at label E.

 

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