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

Book a Complimentary 1 Hour Consult

What our clients say

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

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

MAHA Australia & New Zealand

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

It’s not so big that you feel like just another number, but it’s also big enough that they can cover everything I need.  I feel comfortable with the fact that as my business grows, DFK OGC will be able to handle the demands that come with it.

Lee Chang Woo

We have found DFK OGC’s approach to everything from services provided to how they build relationships one that had worked well for them. We’ve found them to be down to earth, obviously knowledgeable about what they do and approachable as well. They always welcome the phone.

Any time I need them – any of the partners – they’re there to pick up the phone.
And they provide that service after hours as well, which is just great.

Dipak Bagia – CEO Petrochem Group

My Company has been utilising the services of DFKOGC for many years and this itself speaks volumes for the excellent professional services rendered by them. I have been interacting with the DFKOGC team for the past 2 months and I have found them to extremely responsive, very professional and always willing to go the extra mile to service us.

Mary Abraham
Previous
Next