Company loss carry-back rules
Note: Legislation has now been tabled to introduce the new company loss ‘carry-back’ rules. This may be of real benefit to corporate clients who are unfortunate enough to incur losses in the 2012/13 year onwards.
Basically, the provisions operate as follows:
- start day is 1 July 2012;
- a one year carry-back applies for 2012/13 tax losses;
- up to $1 million worth of tax losses are subject to ‘carry-back’ each year for a company to receive a refund of tax paid in a prior year, providing a cash benefit of up to $300,000 a year (i.e., 30% company tax rate x $1 million);
- the measure only applies to tax (i.e., revenue) losses of a company and not to capital losses;
- an integrity rule will deny companies access to the new rules where there is a change in the control of the company to take advantage of the new rules; and
- tax losses carried-back are limited to the franking account balance of the company.