Document ID: chunk:federal_register_of_legislation:C2021C00270:clause:2_2:p3
Version: federal_register_of_legislation:C2021C00270
Segment Type: clause
Provision Reference: sch 2 cl 2 (pt 3/7)
Character Range: 18793–21384

the net exempt income has already been utilised: see section 960‑20.
           Step 3. Multiply the step 2 amount by the *corporate tax rate for the *loss year.
Example: Company A (which is not a base rate entity) has at the end of the 2020‑21 income year:
(a) a tax loss of $900,000 for that year and a franking account balance of $280,000; and
(b) for the 2018‑19 income year—an income tax liability of $120,000 and net exempt income of $5,000; and
(c) for the 2019‑20 income year—an income tax liability of $210,000.
 Company A chooses to carry back $405,000 of its tax loss for the 2020‑21 year to the 2018‑19 year and $495,000 of that loss to the 2019‑20 year.
 Company A's loss carry back tax offset for the 2020‑21 year is $268,500, worked out as follows:
(a) an offset component for the 2018‑19 income year of $120,000, calculated by starting with the $405,000 carried back, reducing that at step 2 by $5,000, and multiplying the result by 30%;
(b) an offset component for the 2019‑20 income year of $148,500, calculated by starting with the $495,000 carried back and multiplying the result by 30%.
 The sum of the 2 components is $268,500 (which is less than Company A's $280,000 franking account balance at the end of the 2020‑21 year). If that sum had exceeded that balance, the amount of the offset would have been limited under paragraph (1)(b) of this section to that balance.

Income tax liability for the 2018‑19 or 2019‑20 income year already utilised
 (3) Subsection (4) applies in relation to applying paragraph (2)(b) to work out the entity's *loss carry back tax offset component for the 2018‑19 or 2019‑20 income year (the gain year) as part of working out the entity's entitlement to a *loss carry back tax offset for the 2021‑22 income year.
 (4) Disregard so much of the entity's *income tax liability for the gain year as has previously been included (as part of working out the entity's entitlement to a *loss carry back tax offset for the 2020‑21 income year) in a *loss carry back tax offset component.

Foreign residents
 (5) Paragraph (1)(b) does not apply if the entity was a foreign resident (other than an *NZ franking company) for:
 (a) if the entity *carries back an amount to the 2018‑19 income year—more than half of the 2018‑19 income year; and
 (b) if the entity carries back an amount to the 2019‑20 income year—more than half of the 2019‑20 income year; and
 (c) if the *current year is the 2021‑22 income year and the entity carries back an amount to the 2020‑21 income year—more than half of the 2020‑21 income year.

Subdivision 160‑B—Loss carry