In 2020 the Australian Government introduced a temporary loss carry back offset for corporate tax entities as part of the JobMaker plan.

This offset granted business owners the opportunity to apply tax losses against tax profits from a previous financial year.

In good news, this measure has been extended, so eligible corporate entities will be allowed to carry back losses as far as the 2018-19 financial year when they lodge their FY 2022-23 tax return.

What is the loss carry-back offset and how does it work?

Businesses with an aggravated turnover of less than $5 billion can apply tax losses against profits in a previous financial year. This turnover threshold means the vast majority of Australian businesses are eligible for this offset.

This initiative means eligible businesses can carry back tax losses from FY 2019-20, FY 2020-21, FY 2022-23 income years to offset previously taxed profits in FY 2018-19 or later income years.

For example, under the previous ruling if a business made a loss in FY 2020-2021 and didn’t return a profit until FY2022-23, they would have had to wait two years to claim back the losses. However, under this new measure the business is able to use its FY 2020-2021 loss to amend its tax returns going back to FY 2018-2019, resulting in an immediate reimbursement of tax previously paid.

Tax depreciation helps businesses make the most out of the loss carry back offset

Claiming depreciation deductions will help businesses make the most out of the loss carry back offset initiative.

Property depreciation is the natural wear and tear of a property and its assets over time. Owners of income-producing residential and commercial properties and commercial tenants can claim this as a tax deduction.

By claiming depreciation deductions businesses can reduce tax liabilities and boost cash flow. Regardless of size, all businesses can benefit from the lucrative depreciation deductions available.

A tax depreciation schedule prepared by a quantity surveyor is needed to identify all depreciation deductions that can be claimed and therefore maximises the loss carry-back initiative.

Tax depreciation is a non-cash deduction. This means businesses do not have to spend any money to claim it, and all schedules are 100 per cent tax deductible.

BMT Tax Depreciation has been specialising in commercial depreciation for over twenty years. The team applies industry-specific legislation to ensure all commercial property owners and tenants claim depreciation to its full potential, while maintaining full Australian Taxation Office compliance.

To learn more about how your business can benefit from maximising loss carry back with a tax depreciation schedule call the experts on 1300 728 726 or Request a Quote.