A policy announcement that didn’t receive a lot of press in the recent federal budget was the ability for companies with turnover up to $5 billion to offset tax losses against previous profits on which tax has been paid to generate a refund.

This measure has been designed to assist a company that was profitable and tax-paying but now find themselves in a loss position due to the COVID-19 pandemic.

What this means is that losses incurred in the 2019–20, 2020–21 and/or 2021–22 financial years can be carried back against profits made in or after the 2018–19 financial years.

Eligible companies may elect to receive a tax refund when they lodge their 2020–21 and 2021–22 tax returns.

In addition there is an additional incentive for a company to take advantage of the Instant Asset write off that results in the tax loss (in the financial year they purchased and installed the equipment) to claim against past profits. This is designed to encourage more businesses to buy assets that can be fully expensed while available.

For further details, please refer here.