You must let us know if you are going use the loss carry-back scheme. You can do this in the ‘I want to’ section of your income tax account in myIR account. If you are not registered for myIR, find out what you can do in myIR and register here.
You can also claim any refunds of overpaid tax from claiming a loss carry-back – refunds will a lot be quicker if the loss carry-back is claimed through myIR.
If you do not use myIR you may use our call-back option to notify us of your details. Your refund will take longer to process.
Claiming a loss carry back in 2020 from 2021 year
If you are going to carry back a loss from the 2021 tax year you can adjust your provisional tax for the 2020 year to reflect the decrease in taxable income in 2020 from the loss carried back, and we will refund any overpaid provisional tax.
Refunds of provisional tax for customers using the standard, estimation or ratio option
You can re-estimate your provisional tax as many times as you need up to the time you file your 2020 income tax return. We will refund any overpaid provisional tax if your new estimation is lower than the tax you have paid to date. For more information read our Provisional tax guide - IR 289
Refunds of provisional tax for customers using the Accounting Income Method (AIM) option
If you use AIM you can include an adjustment for your estimated loss carry-back in your statement of activity and we will refund any overpaid tax. Enter your loss carry-back in the ‘Other Adjustments’ field and include ‘Loss Carried Back 31/03/20’ as the description.
Claiming a loss carry-back in 2019 from the 2020 year
You can amend your 2019 tax return in myIR to include losses you are carrying back from 2020, or include them in your 2019 return if you haven’t filed it.
Shareholder-employees impacted by a 2020 loss carry-back claim
Shareholder-employees who have paid provisional tax on the basis they would receive a shareholder salary in the 2020 year may re-estimate their provisional tax if their company is going to claim a loss carry-back in 2020 which will reduce their shareholder-salary. Any overpaid provisional tax will be refunded.
Shareholder-employees must let us know they are going to re-estimate their provisional tax because of a loss carry-back by using the opt-in service in myIR (in the ‘I want to’ section of your income tax account in myIR). They can then re-estimate their provisional tax up until the time their 2020 return is filed or due, whichever is earlier. In all other situations the last day for a provisional tax estimation is the 3rd provisional tax instalment date.
What if I get it wrong?
When you claim a loss carry-back you are estimating how much that loss in a future year will be. If you carry back more loss than you have available resulting in underpaid tax, use-of-money interest will apply. You cannot use the COVID-19 use of money interest relief provision when any tax is underpaid because of a loss carry-back.
Standard business records
You do not need to provide supporting evidence when you claim a loss carry-back. You must keep standard business records to show the loss. We could ask for the records as part of our compliance activities.
If you are a part of a wholly-owned group you will be required to provide your group information when you file your loss year return, including details of group members and offsets made.
File loss year return on time
Where the tax return in which the loss arises is not filed on time, the loss claimed in the year before may be added back.