On 15 April 2020, New Zealand has announced a temporary loss carry-back scheme in response to COVID-19 to support customers in the current uncertain economic environment.
Businesses expecting to make a loss in either the 2020 year or the 2021 year can use that loss to balance profits they made the year before. That is to say, they can carry the loss back one year to the previous income year. The process can be done before the loss year return is filed.
There are two methods to claim loss carry-back:
- Tax authority suggests to include carry-back loss in taxpayer’s tax return, the tax authority will automatically refund any overpaid tax.
- Taxpayers can ask for a refund of any provisional tax that has been paid for 2020 if taxpayers are going to carry back a loss from 2021.
