Loss carry back and startup refunds: turning a bad year into cash

Two measures in the Budget make tax losses more useful than they've been in years.

First, loss carry back returns. From 1 July 2026, companies with turnover under $1B can carry back tax losses up to 2 years, generating a refundable offset capped by your franking account balance. If you've had a strong run followed by a downturn, you can convert that loss into a real cash refund of tax already paid. Last applied during COVID, this is a useful cash flow tool when trading conditions turn.

Second, and separate, is a startup loss refund. From 1 July 2028, companies under $10M turnover in their first 2 years of operation can convert their tax losses into a refundable offset, capped at the FBT and PAYG withholding the company has paid. Effectively, the government is letting early-stage companies recycle their employment tax payments back into the business when they're loss-making.

Worth knowing:

• Loss carry back is for established companies with a franking balance
• The startup refund is for new companies investing in wages and benefits
• Both are claimed through the tax return, not through a separate application
• Good record keeping on franking and PAYG matters more under both measures

If your company is in a position to use either of these, let us know. They're meaningful at the right moment, and easy to miss in a busy year.