If you are looking to claim the LCB tax offset, the new interactive tool provided by The Australian Taxation Office (ATO) can help. You can use the LCB tax offset tool to:
- confirm your eligibility to claim the tax offset;
- calculate the maximum tax offset amount you are entitled to; and
- display the LCB labels you need to fill out when completing your company tax return.
The tool steps you through the eligibility criteria using a series of simple tick-box-style questions. Once your eligibility has been confirmed, you will be asked a further series of questions to help calculate the maximum tax offset amount you can claim.
The tool will provide you with a printable report that you can keep for your records. This report will help you complete your company tax return as it displays each label you need to complete to make your claim.
This is the link to the Loss Carry Back Tax Offset Tool on the ATO website.
LOSS CARRY BACK OFFSET AND FRANKING ACCOUNTS
The ATO has released a reminder for companies intending to access the loss carry back measure that they should confirm the balance in their franking account as this can limit the amount of loss carry back tax offset that is claimable.
Issues that should be considered when reviewing a company’s franking account include:
- Checking that all transactions have been correctly recorded and there are no missing entries;
- Checking whether the company has any deferred franking debits that relate to R&D tax incentive refunds and that tax payments have been allocated correctly against these deferred debits;
- Checking that the balance has been calculated correctly to see if it is in a credit or debit position at the end of the relevant income year;
- Checking that the company has kept accurate and complete records about all transactions impacting on the franking account balance.
We have seen a number of examples of companies that meet the basic conditions for accessing the loss carry back tax offset but have a relatively low franking account balance which limits the tax offset and cash refund that can be claimed by the company. Remember that you are focusing on the franking account balance at the end of the income year in which the company is claiming the tax offset.