Using the temporary full expensing and loss carry-back measures

MAY 2021

Loss carryback measures were extended to help small business to manage through the COVID pandemic, however they will need to provide additional information to the ATO to make use of them.

The ATO indicates that business taxpayers will be required to complete additional labels in their 2021 tax returns if they are utilising these new provisions or opting out of the temporary full expensing or accelerated depreciation rules.

What information do you need to provide?

When it comes to the temporary full expensing measures, taxpayers will need to provide the following details to the ATO:

  • Whether they are making a choice to opt-out of temporary full expensing for some, or all of, their eligible assets
  • The number of assets they are claiming or opting-out for
  • The value of the assets (if applicable)
  • The total amount of the temporary full expensing deduction
  • Whether they are using the alternative income test (for companies); and
  • Information about their aggregated turnover

Although we are waiting on the 2021 tax return forms to be released, the ATO has provided a specific schedule for use by entities that are required to complete returns for the 2021 year before 1 July 2021. This may include entities with substituted accounting periods, entities ceasing to be Australian residents, and businesses entering into liquidation. A copy of the schedule can be found at the link below.

Companies wishing to take advantage of the loss carry-back measures will need to disclose the following information:

  • The opening and closing franking account balance for the year
  • The aggregated turnover for each loss year; and
  • The amounts of the tax losses that are being carried back

More information

As always, it's worth checking in with your accountant about whether full expensing or loss carryback can be used for your business. For more information, contact us on 02 9957 4033.

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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