The 2020-21 Australian federal budget, handed down on 6 October 2020, included a temporary loss carry-back measure available to eligible taxpayers. This measure was passed by Parliament on 9 October 2020.

Detailed below are the main features of the measure:

1.  Eligible entities with aggregate turnover of less than $5 billion are able to participate.

2. You are an eligible entity if you are both a:

  • • Company, corporate limited partnership or public trading trust during the tax years that the loss is carried back to and the year that the offset is being claimed; and
  • • Small business entity in the loss year or you would have been a small business entity if the aggregated turnover threshold was $5 billion.

3.  You are an eligible entity and:

  • • You made tax losses in the 2019-20, 2020-21, or 2021-22-income years.
  • • You had an income tax liability for the 2018-19, 2019-20, or 2020-21 income years.
  • • You have a surplus in your franking account at the end of the income year that you are claiming the tax offset.
  • • You have met all of your tax return obligations.

4. The measure will be available to eligible entities in the form of a refundable tax offset.

5. The amount of the tax offset cannot exceed the income tax liability for the income year you are carrying the loss back to.

6. The offset can only be claimed in the eligible taxpayers’ tax return for the 2020-21- and 2021-22-income years.

7.  From 1 July 2021, the relevant income tax returns will be updated to include required additional labels to facilitate eligibility disclosure to the Australian Taxation Office.

8. Claiming the loss carry-back offset is optional.

9. To the extent a taxpayer has carried back a tax loss, it can only be used once. This means a taxpayer cannot:

  • • Carry the same tax loss back again.
  • • Carry it forward to use it in a future income year.
  • • This includes any losses that have been used to reduce a company’s exempt income.

10. For a taxpayer to claim the tax offset, they will need to make the “loss carryback choice” by the time the company tax return is lodged for that year.

11.  The “loss carryback choice” will also need to specify the amount of tax loss that is chosen to carry back.


The team at EMspire Advisory are trusted, qualified chartered accountants and work closely with our clients to achieve the best possible outcomes.

If you think you may be eligible to receive the temporary loss carry-back tax offset and would like further information, reach out to our friendly team today!

Please note that this information is not specific and is general in nature and cannot be relied on as advice. Please contact us for advice specific to you and your circumstances. The team at EMspire Advisory are experienced accountants, bookkeepers, and tax agents in Sydney and would like to help you create, grow and succeed in business.