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The temporary loss carry-back scheme lets businesses expecting a loss in either the 2020 or 2021 year offset their loss against income in the previous year. They can receive a refund of some or all of the tax paid in that previous year.

To be eligible you will need to meet the criteria below.

Eligibility criteria

You are not eligible if you receive an automatically calculated income tax assessment in the year the loss was made because your only income was from:

  • salary or wages
  • NZ Superannuation
  • schedular payments
  • income-tested benefits
  • interest or dividends
  • taxable Māori authority distributions
  • benefits under an employee share scheme.

You need to have:

  • incurred, or expect to incur a loss in the 2020 or the 2021 tax year
  • made a profit in the year before the loss was made.

Companies

Companies need to also meet these conditions to be eligible.

  • The company has maintained 49% common ownership throughout the loss year and preceding year.
  • If the company is a member of a group of companies, the group has retained 66% common ownership throughout the loss year and preceding year.
  • You have a sufficient imputation credit account balance to cover any refund.

If a company has an insufficient imputation credit account (ICA) balance, the temporary loss carry back refund cannot be paid. The credit will remain on the companies account to either offset an income tax bill, or refund when there is a sufficient ICA balance.

Losses from residential rental property deductions

You are not eligible to carry-back a loss if it is from residential rental property deductions. 

Multi-rate portfolio investment entities are not eligible.

Am I eligible for the temporary loss carry-back scheme?

The temporary loss carry-back scheme is only for your business if you expect to make a loss in either the 2020 or 2021 tax year. If you're eligible for the scheme, you can use your loss to offset profits you made in the previous year. If you choose not to carry your loss back, you will still be able to carry it forward as normal.
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Last updated: 18 Nov 2021
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