Tax Losses can either be carried forward or carry back losses.

Carried Back Tax Losses

These are laws that provide a company with the choice to carry back all or part of a tax loss from an income year, or the previous income year, against their income tax liability in either of the two previous income years. The losses are capped at $1,000,000.  Therefore up to $300,000 in cash will potentially be available to some companies.  

Carried Forward Tax Losses

Companies can generally carry forward a tax loss indefinitely.  The loss can be deducted in their year of choosing provided that since the loss was initially incurred the company has:

1.    Satisfied the continuity of ownership test (COT) and the control, test; or

2.    Satisfied the same business test (SBT).  

Refer Division 166 of Income Tax Assessment Act (ITAA 1997)