Show download pdf controls
  • How to claim the tax offset

    You cannot claim the tax offset in your Company tax return 2020 for a tax loss made in the 2019–20 income year. You can claim the tax offset in your Company tax return 2021 or Company tax return 2022.

    Claiming the tax offset is optional. To the extent you choose not to carry back the losses, you may be able to carry them forward to a future income year.

    If you want to claim the tax offset for an income year, you will need to make the loss carry back choice by the time you lodge your company tax return for that year. When making the choice, you will also need to specify the amount of tax loss you choose to carry back.

    On this page:

    Watch: Your guide to claiming the loss carry back tax offset

    Media: Your guide to claiming the loss carry back tax offset
    http://tv.ato.gov.au/ato-tv/media?v=bi9or7odeixztkExternal Link (Duration: 07m:16s)

    You can find more information on some of the topics mentioned in the video.

    Find out about:

    Information to claim the tax offset

    You will need to complete additional labels in the Company tax return 2021 to make the choice to carry back losses. These labels provide us with information on your eligibility to claim the tax offset and the calculation of the amount. By completing these labels, we can process your claim in a timely manner.

    To complete the additional labels, you will need to provide:

    • your opening and closing franking account balance – to calculate the amount of the tax offset
    • your aggregated turnover for each loss year – to ensure you meet the eligibility requirement and help inform future services and initiatives for business
    • the amounts of your tax losses that you are carrying back – to inform us of your choice and to calculate the amount of the tax offset
    • your tax liability for the income years you are carrying the loss back to – to calculate the amount of the tax offset
    • the amounts of unutilised net exempt income for the income years you are carrying the losses back to – to calculate the amount of the tax offset.

    You can start preparing for your claim by reviewing your franking account balance early and considering your aggregated turnover. This will give you the information you need to complete the additional labels.

    See also:

    Reviewing franking account balance

    Watch: Review your franking account before making a loss carry back claim

    Media: Review your franking account before making a loss carry back claim
    http://tv.ato.gov.au/ato-tv/media?v=bi9or7odeuqjpqExternal Link (Duration: 06m:29s)

    You can find more information on some of the topics mentioned in the video.

    Find out about:

    When reviewing your franking account balance, check your records and information to ensure you have:

    • identified all transactions that result in a credit or debit in your franking account (see the table below for examples of records or information that you can use to check your transactions) – for example    
      • franking credits arise on paying income tax and pay as you go (PAYG) instalments, incurring a liability for franking deficit tax, and receiving franked distributions
      • franking debits arise on receiving refunds of tax including refunds of PAYG instalments, and paying franked distributions
       
    • recorded all transactions correctly in your franking account, including    
      • whether it is a debit or a credit
      • when the debit or credit arises
       
    • calculated the balance of the franking account correctly in determining whether the franking account is in a surplus (credit) or deficit (debit) position at the end of the income year.

    When considering transactions that result in a credit or debit in your franking account, please note that:

    • credits will arise in your franking account no earlier than when you pay income tax or PAYG instalments and therefore, if you pay an amount late, the credit to your franking account will also be delayed
    • paying your Quarter 4 PAYG instalment on or before the last day of the income year will not result in a credit to your franking account on that day – the credit will occur in the subsequent income year
    • a debit will arise in your franking account if you get a tax refund because you claimed the tax offset – this will happen on the day you receive the refund.

    Remember to keep your working papers for your records, particularly if you have identified and corrected errors when reviewing your franking account.

    The following table provides examples of records or information that you can use to check your transactions which result in credits or debits in your franking account.

    Examples of records or information

    Transactions

    Examples of records or information

    Paying income tax or receiving income tax refund

    Income tax account transaction history via Online services for agents or Online services for business

    Paying PAYG instalments or receiving PAYG instalment refunds

    Integrated client account transaction history via Online services for agents or Online services for business

    Receiving franked distributions

    Company minute book and distribution statements

    Paying franked distributions

    Company minute book and distribution statements

    Receiving research and development (R&D) tax offset

    Records of your R&D tax offset claims

    See also:

    Correcting errors in franking account balance

    If you have identified an error in your franking account balance, you need to both:

    • correct that error in your franking account before you lodge your company tax return for the income year that you are making a claim
    • if the error occurred prior to the commencement of the income year that you are making a claim, provide the corrected opening balance in your company tax return.

    Common errors

    If you do not complete all relevant labels or you make an error when claiming your tax offset, this may:

    • delay the processing of your claim
    • result in an incorrect claim
    • result in your choice being considered as not having been made.

    Avoid common errors, including:

    • entering the wrong amount at one or more labels – for example, the amount of tax loss incurred in the 2020–21 income year carried back to the 2018–19 income year is entered at the label Tax loss for 2020–21 income year carried back to 2019–20
    • disclosing an incorrect opening or closing franking account balance because of errors made when preparing the franking account, such as    
      • missing entries
      • failing to reduce franking credits for any deferred debits (which could result from an amount of R&D tax offset refunded)
      • treating franked dividends received or paid incorrectly (for example, debiting instead of crediting)
      • including Quarter 4 PAYG instalments for an income year prior to year end
       
    • calculating the tax losses incorrectly — see Business losses on what deductions can be included when calculating tax losses
    • calculating the tax offset incorrectly, such as  
      • not using the tax rate for the income year in which you made the loss in step 1d of the calculation – for example, a base rate entity carrying back a tax loss made in the 2020–21 income year should use a tax rate of 26%
      • not using the tax payable amount at T5 in the company tax return for the income year you are carrying the loss back to as the amount of your income tax liability in step 2 of the calculation.
       

    Next step:

    Return to:

    Last modified: 01 Sep 2021QC 66108