2021 Tax tips – How to Engineer a Tax refund this year

Did you know that the combination of the Loss Carry Back and the Temporary Full expensing provisions may help you engineer a tax refund this year?

The Loss Carry Back Tax offset allows eligible business who have experienced a tax loss in the 2020 -2021 tax year, to offset this against taxable income in previous selected years. Click here to learn more about Loss Carry back

Temporary Full Expensing allows eligible businesses to immediately deduct the business portion of the cost of eligible depreciating capital assets. Click here to learn more about Temporary Full Expensing

If you combine these you may be able to turn a 2020 – 2021 taxable income into a tax loss and then engineer a tax refund this year.

An example:

2020 – 2021 expected taxable income pre any temporary full expensing	$30,000
Eligible depreciating asset cost	$50.000
Adjusted tax loss after deducting cost of eligible depreciating asset	$20,000
Taxable income 2019 – 2020	$30,000
Potential cash tax refund (assuming sufficient franking account balance)	$5,200

In this example you spent $50,000 to purchase an eligible depreciating asset that the business needed and you got an upfront tax refund of $5,200.

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