Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-5 - CORPORATE TAXPAYERS AND CORPORATE DISTRIBUTIONS

Division 160 - Corporate loss carry back tax offset for 2020-21, 2021-22 or 2022-23 for businesses with turnover under $5 billion

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History

Div 160 heading amended by No 8 of 2022, s 3 and Sch 6 item 4, substituting " , 2021-22 or 2022-23 " for " or 2021-22 " , effective 1 April 2022.

Div 160 inserted by No 92 of 2020, s 3 and Sch 2 item 2, effective 1 January 2021.

Former Div 160 repealed by No 96 of 2014, s 3 and Sch 2 item 1, effective 30 September 2014 and applicable to assessments for the income year before the income year in which this Schedule commences, for the income year in which this Schedule commences and for later income years. No 96 of 2014, s 3 and Sch 2 item 43 contains the following transitional and saving provision:

43 Making and amending assessments, and doing other things, in relation to past matters
43(1)
Even though a part of an Act is repealed or amended by this Schedule, the repeal or amendment is disregarded for the purpose of doing any of the following under any Act or legislative instrument (within the meaning of the Legislative Instruments Act 2003 ):

(a) making or amending an assessment (including under a provision that is itself repealed or amended);

(b) exercising any right or power, performing any obligation or duty or doing any other thing (including under a provision that is itself repealed or amended);
in relation to any act done or omitted to be done, any state of affairs existing, or any period ending, before the repeal or amendment applies.

43(2)
This item does not limit the operation of the Acts Interpretation Act 1901.

Former Div 160 inserted by No 88 of 2013, s 3 and Sch 5 item 2, effective 29 June 2013.

Subdivision 160-B - Loss carry back choice

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SECTION 160-15 Loss carry back choice

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160-15(1)

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If the *current year is the 2020-21, 2021-22 or 2022-23 income year, the entity may make a loss carry back choice for the current year that specifies the following:

(a)

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if the current year is the 2021-22 income year:

(i) how much (expressed as a specified amount) of the entity ' s *tax loss (if any) for the 2021-22 income year is to be *carried back to the 2020-21 income year; and

(ii) how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2021-22 income year is to be carried back to the 2019-20 income year; and

(iii) how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2021-22 income year is to be carried back to the 2018-19 income year;

(aa)

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if the current year is the 2022-23 income year and the 2022-23 income year was a loss year:

(i) how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2022-23 income year is to be carried back to the 2021-22 income year; and

(ii) how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2022-23 income year is to be carried back to the 2020-21 income year; and

(iii) how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2022-23 income year is to be carried back to the 2019-20 income year; and

(iv) how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2022-23 income year is to be carried back to the 2018-19 income year;

(ab)

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if the current year is the 2022-23 income year and the 2021-22 income year was a loss year:

(i) how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2021-22 income year is to be carried back to the 2020-21 income year; and

(ii) how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2021-22 income year is to be carried back to the 2019-20 income year; and

(iii) how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2021-22 income year is to be carried back to the 2018-19 income year;

(b)

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in any case:

(i) how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2020-21 income year is to be carried back to the 2019-20 income year; and

(i) how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2020-21 income year is to be carried back to the 2018-19 income year;

(c)

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in any case - how much (expressed as a specified amount) of the entity ' s tax loss (if any) for the 2019-20 income year is to be carried back to the 2018-19 income year.

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160-15(2)
The choice under subsection (1) must be made in the *approved form by:

(a) the day the entity lodges its *income tax return for the *current year; or

(b) such later day as the Commissioner allows.

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History

S 160-15 inserted by No 92 of 2020, s 3 and Sch 2 item 2, effective 1 January 2021.

Former s 160-15 repealed by No 96 of 2014, s 3 and Sch 2 item 1, effective 30 September 2014 and applicable to assessments for the income year before the income year in which this Schedule commences, for the income year in which this Schedule commences and for later income years. For transitional and saving provision see note under Div 160 heading. S 160-15 formerly read:

SECTION 160-15 Amount of loss carry back tax offset
160-15(1)
The amount of the entity ' s * loss carry back tax offset for the * current year is the least of the following amounts:

(a) the sum of the * loss carry back tax offset components for the earliest year and the middle year;

(b) the entity ' s * franking account balance at the end of the current year;

(c) $ 1,000,000 multiplied by the * corporate tax rate for the current year.

160-15(2)
For the purposes of working out the amount of the entity ' s * loss carry back tax offset for the * current year, the entity ' s loss carry back tax offset component for an income year is worked out as follows: Method statement

Step 1.
Start with the amount of the * tax loss the entity * carries back to the income year (or the sum of the amounts of the tax losses the entity carries back to the income year).
Note:

If no amount is carried back to the income year, the step 1 amount, and the loss carry back tax offset component . for the income year, are nil.

Step 2.
Reduce the step 1 amount by the entity ' s * net exempt income for the income year.
Note:

Do not reduce the step 1 amount by the entity ' s net exempt income to the extent the net exempt income has already been utilised: see section 960-20 .

Step 3.
Multiply the step 2 amount by the * corporate tax rate for the * current year.

Step 4.
The entity ' s loss carry back tax offset component for the income year is so much of the entity ' s * income tax liability for the income year as does not exceed the step 3 amount.

Example:

Redom Pty Ltd has at the end of the 2013-14 income year:

(a) a tax loss of $ 900,000 for that year and a franking account balance of $ 280,000; and

(b) for the 2011-12 income year - an income tax liability of $ 120,000 and net exempt income of $ 5,000; and

(c) for the 2012-13 income year - an income tax liability of $ 210,000.

Redom chooses to carry back $ 405,000 of its tax loss for the 2013-14 year to the 2011-12 year and $ 495,000 of that loss to the 2012-13 year.

Redom ' s loss carry back tax offset for the 2013-14 year is $ 268,500, worked out as follows:

(a) an offset component for the 2011-12 income year of $ 120,000, calculated by starting with the $ 405,000 carried back, reducing that at step 2 by $ 5,000, and multiplying the result by 30 % .

(b) an offset component for the 2012-13 income year of $ 148,500, calculated by starting with the $ 495,000 carried back and multiplying the result by 30 % .

The sum of the 2 components is $ 268,500 (which is less than Redom ' s $ 280,000 franking account balance at the end of the 2013-14 year). If that sum had exceeded that balance, the amount of the offset would have been limited under paragraph (1)(b) to that balance.

Income tax liability for earliest year already utilised

160-15(3)
For the purposes of applying step 4 of the method statement in subsection (2) to work out the entity ' s * loss carry back tax offset component for the earliest year, disregard so much of the entity ' s * income tax liability for the earliest year as has previously been included (for the purpose of working out the entity ' s entitlement to a * loss carry back tax offset for the middle year) in a loss carry back tax offset component.

Foreign residents

160-15(4)
Paragraph (1)(b) does not apply if the entity was a foreign resident (other than an * NZ franking company) for:

(a) if the entity * carries back an amount to the earliest year - more than half of the earliest year; and

(b) if the entity carries back an amount to the middle year - more than half of the middle year.

Former s 160-15 inserted by No 88 of 2013, s 3 and Sch 5 item 2, effective 29 June 2013.

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