02/09/2026
【 Company Loss Carry Back is now law 】
For many businesses, a tax loss has traditionally meant carrying that loss forward and waiting until the company becomes profitable again before receiving any tax benefit.
From FY2027, eligible companies have another option — Company Loss Carry Back.
The Treasury Laws Amendment (Tax Reform No. 2) Act 2026 received Royal Assent on 26 August 2026 (Act No. 71), making the measure law.
What does this mean in practice?
In simple terms, if your company:
✔️ made taxable profits and paid company tax in the previous two income years; and
✔️ subsequently incurs an eligible tax loss,
it may be able to carry that loss back against previously taxed profits and receive a refundable tax offset.
In other words, instead of waiting for future profits to utilise the tax loss, an eligible company may be able to access some of the tax benefit sooner — potentially providing valuable cash flow support.
Who may be eligible?
The key conditions include:
✔️ The entity must be an eligible company / corporate tax entity
✔️ Annual global income must be below $1 billion, excluding Significant Global Entities
✔️ The loss must arise in an income year commencing on or after 1 July 2026 — generally FY2027 onwards
✔️ The measure applies to eligible revenue tax losses
❌ Capital losses cannot be carried back
A simple example
ABC Pty Ltd made taxable profits and paid company tax in FY2025 and FY2026.
In FY2027, the company incurs a $150,000 tax loss.
Assuming a 25% company tax rate:
$150,000 × 25% = $37,500
On a simplified basis, this could potentially generate a refundable tax offset of up to $37,500.
However, this does not mean every $150,000 loss automatically results in a $37,500 refund.
The actual amount available will depend on factors including the company’s prior tax liabilities, the amount of eligible tax loss carried back and its franking account balance.
How does a company claim it?
Generally, there is no need to lodge a separate application with the ATO.
The company makes the Loss Carry Back election through its Company Tax Return for the loss year, specifying the amount of loss to be carried back and the relevant prior income year.
The resulting refundable tax offset is then determined under the applicable rules.
Which businesses should be paying attention?
This measure may be particularly relevant for companies that were profitable and paying tax in the last two years but are now experiencing a temporary loss due to:
• business expansion
• increased staffing costs
• major investment or expenditure
• rising operating costs
• changing market conditions
Traditionally, when a company made a loss, the question was:
“When can we use this tax loss in the future?”
From FY2027, there is another question worth asking:
“Can we use this loss to recover some of the company tax we have already paid?”
For businesses managing expansion or short-term cash flow pressure, that distinction can be significant.
At Eway Growth Partners, we believe good tax planning is not simply about knowing what the rules are — it is about understanding when and how those rules can create value for your business.
If your company has paid tax in the previous two years and is expecting a tax loss in FY2027, it may be worthwhile assessing your potential Loss Carry Back position as part of your year-end tax planning.
This post provides general information only and does not constitute tax advice. Eligibility and the amount of any refundable tax offset will depend on the circumstances of each business.
Eway Growth Partners
Accounting | Tax | Business Advisory | Growth
