As part of the package that repeals the mining tax, businesses will no longer be able to claim the loss carry-back tax offset.
The loss carry-back tax offset allowed businesses to ‘carry-back’ losses of up to $1 million to an immediately previous financial year.
This essentially meant that they were able to claim back tax paid on a previous year’s profits in order to offset losses in the following year. The loss carryback tax offset was not available to sole traders, partnerships or trusts.
The repeal of the loss carry-back tax offset took effect on 30 September 2014. The repeal applies to the financial year prior to the date that it takes effect.
For most taxpayers this means that the repeal applies to the 2013/14 financial year, as 30 September 2014 falls in the 2014/15 financial year. Therefore, the loss carry-back tax offset remains in place for the 2012/13 financial year.
However, for some businesses with late substituted accounting periods, the repeal may also extend to the 2012/13 financial year. The ATO has indicated that it will contact businesses in this category to discuss their circumstances.
If you have already completed your tax return for the 2013/14 financial year and claimed the loss carry-back offset then the ATO will reasses your claim. You will be sent an amended notice of assessment and this will include any amount that needs to be repaid. If the amount is paid in full by the indicated due date then it will not be subject to interest and or attract any penalties.
Businesses that have not yet completed their tax return for the 2013/14 financial year cannot claim the loss carry-back tax offset.
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