• Service: Tax, Corporate Tax
  • Type: Regulatory update
  • Date: 11/09/2013

Tax Insights

KPMG's analysis of tax issues and developments.

Alison Young

Alison Young
Director, Tax

+61 2 9335 7193

How certain is the availability of your tax losses? 

by Alison Young, Corporate Tax Specialist

In recent years, tax losses are an increasing reality for many taxpayers that are adapting to changing markets and globalisation. The availability of these tax losses, particularly when they are booked as a deferred tax asset, requires careful consideration and vigilance.

For some, tax loss carry backs may provide immediate cash relief where the business has only recently began to generate tax losses after having been historically tax payable. However, the Coalition have costed that loss carry back will be discontinued for the 2015 year onwards.


Otherwise, carrying forward tax losses requires taxpayers to step through a complicated maze of ownership and same business testing rules that are subject to a number of announced law changes. Many of these changes are intended to be retrospective to 1 July 2002 but are still pending the enactment of amending legislation.


One such example arises for taxpayers with multiple classes of shares that have varying dividends or voting rights, with announced law change and prior Exposure Draft legislation yet to be finalised and enacted.


For companies with tax losses that are impacted by legislative uncertainty regarding ownership testing, care and vigilance is required in supporting the availability of tax losses.


This may involve:

  • establishing a reasonably arguable position on the technical law, where possible, in the absence of legislative change
  • relying on available ATO administrative treatments to adopt the law as announced but not enacted
  • monitoring of business activities and income to ensure that the ‘same business’ is maintained until such time as the law is retrospectively amended.

Please contact your KPMG corporate tax specialist to discuss further.


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