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13. Losses information

Last updated 24 July 2023

Instructions to complete any losses you had to carry forward to later income years.

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, 2021–22 and 2022–23 income years to a prior year's income tax liability in the 2018–19, 2019–20, 2020–21 and 2021–22 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 2022–23 is not required to complete item 13 – labels U and V and Loss carry back. Other companies, including the head company of a consolidated or MEC group at the end of 2022–23, may need to complete item 13 – labels U and V and Loss carry back.

U – Tax losses carried forward to later income years

Write at item 13 – label 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 item 13 – label A, B C, D, E, F, T, W, X and Y.

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 5.

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 item 8 – label H Excess franking offsets, 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:

  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.
  2. Divide the amount of excess franking offsets by the applicable corporate tax rate.
  3. Add the result of steps 1 and 2.
  4. Subtract 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 label U with any unapplied tax losses from prior income years.

If you are required to complete a Losses schedule 2023, the amount of the tax losses you show at item 1 Tax losses carried forward to later income years – label U Total in part A of that schedule must be the same as the amount you show at label U in the Company tax return 2023.

Do not include any net capital losses to be carried forward to later income years at label U. Show these separately at item 13 – label V Net capital losses carried forward to later income years on the Company tax return 2023 and in the Capital gains tax schedule 2023, 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 2023, the amount of the tax losses shown at item 5 Tax losses carried forward to later income years – label U Total in part A of that schedule must be the same as the amount shown at label U in the Company tax return 2023.

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

V – Net capital losses carried forward to later income years

Write at item 13 – label 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:

For more information, see Guide to capital gains tax 2023.

If the company is required to complete a Losses schedule 2023, the amount of the net capital losses shown at item 2 Net capital losses carried forward to later income years – label V Total in part A of that schedule must also be the same as the amount shown at label V on the Company tax return 2023.

Consolidated or MEC groups

If a head company of a consolidated or MEC group is required to complete a Consolidated groups losses schedule 2023, the amount of the net capital losses shown at item 10 Net capital losses carried forward to later income years – label V Total in part A of that schedule must also be the same as the amount shown at label 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, label V is not applicable.

Loss carry back labels

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, 2021–22 and 2022–23 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 2022–23 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 2019–20, 2020–21, 2021–22 and/or 2022–23 income year.
  • The entity had an income tax liability for 2018–19, 2019–20, 2020–21 and/or 2021–22 income year.
  • The entity makes a loss carry back choice in the Company tax return 2023.
  • Any of the following requirements is satisfied for 2022–23 and each of the 5 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 2022–23.

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.

If you chose to carry back some or all of your tax losses in the Company tax return 2021 or Company tax return 2022 and now wish to change that loss carry back choice, you need to submit the Loss carry back change in choice schedule 2021 (or 2022 as the case may be) with the amendment request for your Company tax return 2021 (or 2022), see Change in loss carry back choice.

Tax losses you choose to carry back

Complete labels A, B, C, D, E, F, T, W, X and Y relating to tax losses you choose to carry back.

Write at label A the amount of tax losses incurred in 2019–20 that the entity is choosing to carry back to 2018–19.

Write at label B the amount of tax losses incurred in 2020–21 that the entity is choosing to carry back to 2018–19.

Write at labelC the amount of tax losses incurred in 2020–21 that the entity is choosing to carry back to 2019–20.

Write at label D the amount of tax losses incurred in 2021–22 that the entity is choosing to carry back to 2018–19.

Write at label E the amount of tax losses incurred in 2021–22 that the entity is choosing to carry back to 2019–20.

Write at label F the amount of tax losses incurred in 2021–22 that the entity is choosing to carry back to 2020–21.

Write at label T the amount of tax losses incurred in 2022–23 that the entity is choosing to carry back to 2018–19.

Write at label W the amount of tax losses incurred in 2022–23 that the entity is choosing to carry back to 2019–20.

Write at label X the amount of tax losses incurred in 2022–23 that the entity is choosing to carry back to 2020–21.

Write at label Y the amount of tax losses incurred in 2022–23 that the entity is choosing to carry back to 2021–22.

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 2023, the total of the amount you show at item 13 – labels A, B, C, D, E, F, T, W, X and Y in 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 2023, the total of the amount shown at item 13 – labels A, B, C, D, E, F, T, W, X and Y at item 13 on the company tax return must be included in label I Tax losses deducted in part F of the Consolidated groups losses schedule.

Tax rate labels

Completing labels G, H and Z relating to the tax rate applicable in the relevant income year.

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

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

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

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

Complete label Z only if you are choosing to carry back a tax loss from 2021–22.

Write at label Z the tax rate that applied to you in 2021–22.

Net exempt income labels

Complete labels I, J, K and A relating to net exempt income.

If the entity is choosing to carry back a tax loss to the 2018–19 income year, write at label 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 label 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 tax loss to the 2020–21 income year, write at label K the amount of any unutilised net exempt income that the entity had in the 2020–21 income year.

If the entity is choosing to carry back a tax loss to the 2021–22 income year, write at label A the amount of any unutilised net exempt income that the entity had in the 2021–22 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.

Income tax liability labels

Complete labels L, M, N and B relating to income tax liability.

If the entity is choosing to carry back a tax loss to the 2018–19 income year, write at label L the amount of income tax assessed to the entity for the 2018–19 income year. This is the amount assessed in the Calculation statement at label T5 Tax payable of the Company tax return 2019 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 label M the amount of income tax assessed to the entity for the 2019–20 income year. This is the amount assessed in the Calculation statement at T5 Tax payable of the Company tax return 2020 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, write at label N the amount of income tax assessed to the entity for the 2020–21 income year. This is the amount assessed in the Calculation statement at T5 Tax payable of the Company tax return 2021 or the tax liability after any amendments to the 2020–21 income year.

If the entity is choosing to carry back a tax loss to the 2021–22 income year, write at label B the amount of income tax assessed to the entity for the 2021–22 income year. This is the amount assessed in the Calculation statement at T5 Tax payable of the Company tax return 2022 or the tax liability after any amendments to the 2021–22 income year.

Aggregated turnover labels

Complete labels O, P, Q, R, C and D relating to the aggregated turnover range.

Table: Category for aggregated annual turnover range

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

O – Select your aggregated turnover range for 2019–20

Complete labels 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 label O the category for your aggregated turnover range for 2019–20. Select a category from the table above based on your aggregated turnover range and write the category code at label O. Your aggregated turnover range selected can be either your 2019–20 aggregated turnover or your 2018–19 aggregated turnover. For more information, see Aggregated turnover for small business CGT concessions.

P – Aggregated turnover for 2019–20

Write at label 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 label 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 labels 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 label Q the category for your aggregated turnover range for 2020–21. Select a category from the table above based on your aggregated turnover range and write the category code at label 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 label 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 label 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.

C – Select your aggregated turnover range for 2021–22

Complete labels C and D only if you have made the choice to carry back a tax loss from 2021–22.

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

Write at label C the category for your aggregated turnover range for 2021–22. Select a category from the table above based on your aggregated turnover range and write the category code at label C. Your aggregated turnover range selected can be either your 2021–22 aggregated turnover or your 2020–21 aggregated turnover. For more information, see Aggregation.

D – Aggregated turnover for 2021–22

Write at label D your actual aggregated turnover rounded to the nearest $100 million if you selected category P (that is, aggregated turnover $1 billion or over) at label C or are a significant global entity and completed label C. Your aggregated turnover specified can be either your 2021–22 aggregated turnover (the income year you have carried back a loss from) or your previous year's aggregated turnover, 2020–21.

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 Loss carry back tax offset tool to work out the loss carry back tax offset.

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 2022.
  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.
Start of example

Example 14a

In 2020–21, QWD Construction Pty Ltd (QWD) made a tax loss of $2,100,000 and chose to carry back $1,100,000 of this loss to 2018–19. QWD had $100,000 of exempt income in 2018–19 which was utilised against the loss carried back. Therefore, QWD claimed a loss carry back tax offset of $300,000 in its 2020–21 company tax return. It carried forward $1,000,000 of its 2020–21 tax loss.

In 2021–22, QWD made a tax loss of $1,000,000 and it chooses to carry back the whole of the tax loss to the 2018–19 income year. QWD also chooses to carry back the balance of the 2020–21 loss to the 2018–19 income year.

QWD is eligible to claim the loss carry back tax offset.

Relevant Information:

  • net exempt income for 2018–19: $0
  • income tax liability for 2018–19: $900,000
  • franking account balance at the end of 2021–22: $5,000,000
  • tax rate for all years: 30%.

Method statement

Step 1

For the 2020–21 loss carried back to 2018–19:

  • QWD choses to carry back the remaining $1,000,000 of the tax loss from 2020–21 to 2018–19. It therefore records $1,000,000 at 13B
  • QWD has no unutilised net exempt income as it was utilised in calculating the loss carry back tax offset in 2020–21. Therefore, no reduction is necessary.
  • $1,000,000 is multiplied by the tax rate for 2020–21 (30%) giving a result of $300,000.

For the 2021–22 loss carried back to 2018–19:

  • QWD chooses to carry back all $1,000,000 of the tax loss from 2021–22 to 2018–19. It therefore records $1,000,000 at 13D.
  • QWD has no unutilised net exempt income as it was fully utilised in calculating the loss carry back tax offset in 2020–21. Therefore, no reduction is necessary.
  • $1,000,000 is multiplied by the tax rate for 2021–22 (30%) giving a result of $300,000.

Step 2

  • The amounts calculated at step 1 for the losses carried back from 2020–21 and 2021–22 are added together and equal $600,000.
  • The income tax liability for 2018–19 was $900,000. In the 2020–21 company tax return, QWD had claimed $300,000 against this liability. Hence the unused income tax liability for the 2018–19 year is $600,000.
  • The tax offset amount does not exceed the remaining tax liability for the 2018–19 year and therefore the step 2 amount is $600,000.

Step 3

The losses are carried back to only one earlier income year, 2018–19, therefore the step 3 amount is also $600,000.

Step 4

The amount calculated for step 3 does not exceed the franking account surplus on 30 June 2022. Therefore, the loss carry back offset is $600,000.

In its 2021–22 company tax return, QWD claims $600,000 loss carry back refundable tax offset by:

  • writing $600,000 at item 13 – label S
  • adding $600,000 to other amounts (where applicable) in the Calculation statement at label E.

QWD has no tax losses available from 2021–22 to carry forward.

End of example

 

Start of example

Example 14b

QWD Construction Pty Ltd (QWD) made a tax loss of:

  • $1,300,000 in 2021–22
  • $500,000 in 2020–21
  • $400,000 in 2019–20.

It is eligible to claim the loss carry back tax offset and wants to do so.

Relevant Information:

  • income tax liability for 2018–19: $450,000
  • tax loss for 2019–20: $400,000
  • tax rate for 2019–20: 27.5%
  • tax loss for 2020–21: $500,000
  • tax rate for 2020–21: 26%
  • tax loss for 2021–22: $1,300,000
  • tax rate for 2021–22: 25%
  • franking account balance at the end of 2021–22: $500,000.

Method statement

Step 1:

For the loss made in 2019–20:

  • QWD chooses to carry back all $400,000 of the 2019–20 tax loss to 2018–19. It therefore records $400,000 at item 13 – label A.
  • There was no exempt income in 2018–19 and therefore there is no reduction.
  • $400,000 is multiplied by the tax rate of 27.5% for 2019–20, giving a total of $110,000.

For the loss made in 2020–21:

  • QWD chooses to carry back all of the $500,000 of the 2020–21 tax loss to 2018–19. It therefore records $500,000 at item 13 – label B.
  • There was no exempt income in 2018–19 and therefore there is no reduction.
  • $500,000 is multiplied by the tax rate of 26% for 2020–21, giving a result of $130,000.

For the loss made in 2021–22:

  • QWD chooses to carry back $500,000 of the 2021–22 tax loss to 2018–19. It therefore records $500,000 at item 13 – label D.
  • There was no exempt income in 2018–19 and therefore there is no reduction.
  • $500,000 is multiplied by the tax rate of 25% for 2021–22, giving a result of $125,000.

Step 2:

  • The amounts calculated at step 1 for the losses carried back from 2019–20, 2020–21 and 2021–22 are added together and equal $365,000.
  • This amount does not exceed the tax liability for 2018–19, therefore the step 2 amount is $365,000.

Step 3:

The losses are carried back to only one earlier income year, 2018–19, therefore the step 3 amount is also $365,000.

Step 4:

The amount calculated for step 3 does not exceed the franking account surplus on 30 June 2022. Therefore, the loss carry back offset is $365,000.

In its 2021–22 company tax return, QWD claims $365,000 loss carry back refundable tax offset by:

  • writing $365,000 at item 13 – labelS
  • adding $365,000 to other amounts (where applicable) in the Calculation statement at label E.

QWD has $800,000 tax losses remaining to carry forward from 2021–22 as is recorded at item 13 – label U

End of example

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