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Company loss carry-back
In the 2012 Budget, the Government announced its intention to provide tax relief for companies by allowing them to carry back tax losses so they receive a refund against tax previously paid.
Tax losses incurred by a company can be carried forward and deducted against income derived in later income years, or in certain circumstances, carried back against the income tax liability it had for either of the two preceding income years to obtain a refundable tax offset.
A transitional one year carry back period applies for 2012-13. You can read question 13 Loss carried back in the Company tax return instructions 2013 for more information.
If the company has claimed a loss carry back tax offset, ensure the amount of tax losses chosen t to be carried back is not included in tax losses carried forward to later income years.
Who must complete the Consolidated groups losses schedule 2013?
A head company of a consolidated group or multiple entry consolidated (MEC) group must complete the schedule and lodge it with the Company tax return 2013 (NAT 0656), if any of the following apply:
- The total of the group's tax losses and net capital losses carried forward to later income years is greater than $100,000.
- The total of its tax losses and net capital losses transferred from joining entities is greater than $100,000.
- The total of its utilised tax losses and net capital losses is greater than $100,000.
- it has a foreign loss component of a tax loss deducted in the 2012-13 income year or carried forward to later income years.
- It has an interest in a controlled foreign company (CFC) that has current year losses greater than $100,000.
- It has an interest in a CFC that has deducted or carried forward a loss to later income years greater than $100,000.
- It is a life insurance company and has a total of complying superannuation/first home savers account (FHSA) class tax losses and complying superannuation/FHSA net capital losses carried forward to later income years greater than $100,000.
- has chosen to carry back tax losses greater than $100,000 in order to obtain a refundable tax offset,
The examples provided in these instructions are for illustration purposes only and may use lower figures, for simplicity.
A head company may need to complete the schedule for certain aspects of its net capital losses. While some of the information requested in the schedule is also requested in the Capital gains tax (CGT) schedule 2013 (NAT 3423) (CGT schedule), a head company that completes a consolidated groups losses schedule may also need to complete a CGT schedule.
If the head company completes the schedule for any aspect of its losses, it must complete all relevant parts of the schedule. For example, if a head company completes the schedule as a result of having tax losses and net capital losses carried forward to later income years greater than $100,000, it must also provide details of controlled foreign company (CFC) losses, even if the total of these losses is less than $100,000.
These instructions are based on provisions relating to consolidated groups. Some of those provisions are modified in Division 719 of the Income Tax Assessment Act 1997 (ITAA 1997) in relation to MEC groups.