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How to change loss carry back choice

Tax

The ATO has outlined how to make alterations to the relevant year.

By Josh Needs3 minute read

The ATO has outlined the process required to change loss carry back choices from particular income years. 

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When the original loss carry back choice was made, individuals specified the tax loss from a particular income year that was to be carried back to an earlier income year. 

The ATO has said that if the loss carry back choice needed to be changed it had to be done with the approved form and within the time limit for amending the tax assessment. The change would also take effect from the day the original loss carry back choice was made.

Changing the loss carry back choice for an income year may also affect future assessments for subsequent income years.

The ATO provides an example of how change in loss carry back choice could work.

“XYZ Co made a loss carry back choice in its company tax return 2021 to carry back $5,000 of the $10,000 tax loss it made in that income year to the 2019-20 income year. Later it decides that it wants to carry back all the $10,000 tax loss to the 2019-20 income year, the ATO said.

XYZ Co notifies the ATO of its change in loss carry back choice using the approved form within the time limit for amending its tax assessment for the 2020-21 income year. To notify us using the approved form, XYZ Co completes the loss carry back change in choice schedule 2021 and lodges it with its amendment request for company tax return 2021.”

The ATO also said you cannot use this schedule to change an amount of tax loss that you chose to carry back if that specified amount of tax loss exceeded the correct amount of tax loss for that income year. Whether you were a tax practitioner or a business taxpayer, the ATO said that to carry back the correct amount of tax loss you needed to contact them. 

As mentioned in its example, to notify the ATO of a loss carry back choice individuals or tax agents must complete the relevant loss carry back change in choice schedule, either 2021 or 2022 depending on if it is for the 2020-21 income year or the 2021-22 income year.

Changing the loss carry back choice for an income year takes effect from the day the original loss carry back choice was made.

This may affect the amount of tax losses available to be carried forward to use in a later income year and a loss carry back choice for subsequent income years.

How to change loss carry back choice
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Josh Needs

Josh Needs

AUTHOR

Josh Needs is a journalist at Accountants Daily and SMSF Adviser, which are the leading sources of news, strategy, and educational content for professionals in the accounting and SMSF sectors.

Josh studied journalism at the University of NSW and previously wrote news, feature articles and video reviews for Unsealed 4x4, a specialist offroad motoring website. Since joining the Momentum Media Team in 2022, Josh has written for Accountants Daily and SMSF Adviser.

You can email Josh on: This email address is being protected from spambots. You need JavaScript enabled to view it.

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