Loss carry back is back. The Australian Government announced on 12 May 2026, in its 2026–27 Budget, that it would reintroduce a loss carry back tax offset. The measure has since become law under the Treasury Laws Amendment (Tax Reform No. 2) Act 2026.
Who qualifies for loss carry back
Corporate tax entities (in practice, mostly companies) can use it, as long as they are not significant global entities. It covers revenue losses only, so capital losses don’t count. The offset is also capped at the company’s franking account balance.
When loss carry back starts
The rules apply to income years starting on or after 1 July 2026. Eligible companies can make their first claim for the refundable tax offset in their 2026–27 income tax returns.
What it means in practice
A qualifying company that makes a revenue tax loss can carry it back and offset it against tax paid in either or both of the two previous income years. In effect, it gets some of that tax back as a refund.
The catch is the franking account. The offset can’t be more than the company’s franking account balance. A company with a small balance may get back only part of the benefit, and one with a nil balance can’t claim anything at all. Check where your franking account stands before counting on a refund.
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General information only, not legal advice. Check the official source before acting.
Source: Australian Taxation Office. Licence: CC BY 4.0.
