Offset Current Losses Against Prior Year Profits – Tax Refund

So, you’ve had a bad year. Forced closures, restricted trading and reduced demand has impacted your sales and you are staring at a loss for the year to 2021.

Losses made this year can be offset against later years’ profits to reduce future tax. But that doesn’t help right now when you are doing it tough.

Well, there’s some good news. The government has enacted ‘Loss Carry Back’ legislation for companies to allow them to offset the 2021 losses against prior years’ profits to reduce the tax that was payable in those prior years.

If you’ve already paid your tax for those years, then the reduction will result in a refund being issued to you.

If your company is on a payment plan for those years, then the reduction will reduce the amount that you owe and may even result in a refund of instalments already paid.

The company does not need to amend the tax returns for the earlier income years to claim the offset. By making an election in your 2021 tax return, the ‘Loss Carry Back’ offset will be automatically calculated.

As a boost to business, the government has introduced the latest concession “Temporary full expensing” which has the same effect as the “Instant Asset Write Off” in that the business portion of expenditure on new and second-hand assets acquired between 6 October 2020 and 30 June 2023 can be written off fully in the year of purchase.

These write-offs will reduce profits and may contribute to losses. If the company couples these concessions with the Loss Carry Back rules, then a tax refund may result which will increase business cash flow.


1. Companies with an aggregated turnover of less than $5 billion.

2. Must have met all lodgement obligations of the past 6 years. (All tax returns and BAS’s lodged).

3. Must have surplus in your “Franking Account” (i.e.: able to pay a dividend) at the end of the income year that you are claiming the tax offset.

Years Effected

Loss Year - 2020 Carry back to 2019

Loss Year - 2021 Carry back to 2019 & 2020

Loss Year - 2022 Carry back to 2019, 2020,& 2021

For more information, contact your MKA contact on 03 9585 7555 or email us at