At UHY Haines Norton, we’ve already lodged several returns for our clients utilising the ‘loss carry back’ concession.
This concession is beneficial, because a loss made in the 2013 year can be used to obtain a refund for tax paid in 2012. Take a look at the example below:
YEAR ENDED 30 JUNE 2012:
Taxable income: $600,000
Tax paid at 30%: $180,000
YEAR ENDED 30 JUNE 2013:
Taxable loss: $(350,000)
Available refund $105,000
This is a great cashflow benefit, especially for clients whose profits fluctuate year to year.
Remember, the concession is only available for companies where there is a loss in the year ended 30 June 2013, and a profit in the year ended 30 June 2012.
The refund you can obtain on lodgement of the 2013 income tax return is subject to a limit. The maximum refund is the lowest of:
- The franking account balance at 30 June 2013
- The tax paid in the 30 June 2012 financial year. In the above example, if a loss of $700,000 was made in the year ended 30 June 2013, the maximum refund available would be $180,000.
If you paid tax last year, and think you will have a loss this year, you should be lodging as soon as possible. This will give you the cash flow benefit of receiving your refund entitlement now.