Loss Carry Back Returns for Companies

Legislation has been proposed to reintroduce the loss carry back measure for companies from 1 July 2026.

The measure would allow eligible companies to offset current year tax losses against profits and tax paid in previous years, potentially resulting in a tax refund when business conditions become challenging.

For companies experiencing temporary downturns, this could provide valuable cash flow support at a time when funds are needed most.

Understanding how it works

Normally, tax losses are carried forward and used to reduce taxable income in future years.

Loss carry back provisions operate differently by allowing eligible companies to apply current losses against profits from prior years. Where tax has already been paid on those profits, businesses may be able to receive a refund.

This approach can provide immediate financial relief rather than waiting until future profits are generated.

Why cash flow matters

Cash flow remains one of the most important factors in business resilience. Access to additional funds can help businesses:

• Meet operating expenses
• Manage periods of reduced revenue
• Invest in recovery initiatives
• Retain employees
• Continue strategic projects

Businesses should review how the proposed changes could affect their tax position and future planning opportunities.