Managing losses with the new carry-back scheme

IRD has introduced a temporary loss carry-back scheme to provide financial support to businesses expecting to make a loss in the 2020 or 2021 income years. Under the temporary loss carry-back scheme, businesses can carry losses made in 2020 (or predicted to make in 2021) back to the preceding income year to offset them with the previous year’s profits. 

Businesses doing so will receive a refund of some or all of the tax paid in that previous year. In addition to incurring a loss in 2020 (or expected to in 2021) and having made a profit in the previous year, businesses also need to meet certain conditions throughout both the loss year and preceding year to be eligible for the scheme:

  • The company maintained a 49% common ownership.
  • The group retained a 66% common ownership
  • The business has a sufficient imputation credit balance to cover any refunds. 

Businesses receiving an automatic income tax assessment in the year the loss was made, with income sourced solely from any one of the following, will not be eligible for the scheme:

  •  Salaries
  • NZ Superannuation
  • income-tested benefits
  • taxable Māori authority distributions
  • benefits under an employee share scheme
  • interest or dividends, or 
  • schedular payments.

The IRD encourages businesses looking to use the loss carry-back scheme to register online through their income tax account in myIR. Refunds of overpaid tax from claiming a loss under the carry-back scheme will be issued quicker for claims made through myIR.

If you have any questions about this, please don’t hesitate to speak with one of our partners

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What our clients say

We have been dealing with the team at DFKOGC since last 10 years and we have always found them to be very professional and supportive to all our accounting needs.They do have full range of professionals available in the team to cater for all the accounting related Services and very responsive to all the client requirements.

Munish Singla

Extremely professional and astute business advisors. Our businesses has benefitted and elevated to new horizons with DFK OGC by our side. Even when going gets challenging, they are open to seek subject matter experts. Anit Patel and his entire team are great highly recommended.

Sanjai Bagia

DFK have supported us for many years and the service has been great across various partners.

MAHA Australia & New Zealand

The team at DFKOGC is incredibly knowledgeable and experienced in the field of accounting. They took the time to thoroughly understand our financial situation and provided tailored solutions that perfectly suited our business needs. Their attention to detail and accuracy in handling our accounts give us complete peace of mind. On behalf of Maungakiekie Golf Club, I wholeheartedly recommend DFKOGC to anyone in need of professional accounting services.

Hugo Littlejohn

Very efficient and has a personal touch. If you have questions, they respond in a timely manner and even visits you to explain things face to face.

Marlo Camacho

Brilliant team. Extremely helpful and professional business attitude.

Mehernosh Kotwal