Background of the scheme
To help small businesses cope with cash-flow
problems especially in cyclical downturns, a one-year carry-back of current
year unutilised CAs and trade losses was introduced effective YA 2006.
New! To help businesses with their cash flow, it was announced in
Budget 2020 that the Loss Carry-back Relief will be temporarily enhanced for YA 2020 as follows:
1. The number of YAs to which unutilized CAs and trade losses from YA 2020 can be carried back will be increased from one YA to three YAs immediately preceding YA 2020 (i.e YA 2017, YA 2018 and YA 2019) (“enhanced carry-back relief”).
2. Businesses may elect for the enhanced
carry-back relief based on an estimate
of the current year unutilised CAs and trade lossesfor
YA 2020.
Please refer to the e-Tax Guide on Enhanced Carry-back Relief System (PDF,428KB) for more information on the Loss Carry-back Relief for YA 2020
Main Features of Loss-Carry Back Relief
1.
Current year
unutilised CAs and trade losses are allowed (collectively referred to as
“Qualifying Deductions” or “QD”) to be carried back for one YA or three YAs
(for YA 2020) immediately preceding that YA in which the CAs are granted or the
trade losses incurred;
2.
A maximum
amount of $100,000 of current year QD can be carried back;
3. The current
requirements for carrying forward QD will apply in the same way when these
amounts are carried back, i.e., carry on the same trade or business.
4. The
carry-back will be given on due claim.
5. For the purpose of carrying
back QD for YA 2020, the carry-back shall be made in the following order:
i. Firstly, to the third YA immediately
preceding YA 2020 (i.e. YA 2017);
ii. Secondly, where there are QD
remaining after (i), the balance will be carried back to the second YA
immediately preceding YA 2020 (i.e. YA 2018); and
iii. Finally,
where there are QD remaining after (ii) above, the balance will be carried back
to the YA immediately preceding YA 2020 (i.e. YA 2019)
The
excess of QD that are not carried back can be carried forward for deduction
against the body of persons’ future taxable income, subject to the meeting of
conditions.
For more details, please refer to e-Tax Guide Carry-Back Relief System (522 KB).
Claiming Carry-Back Relief
To claim the
carry-back relief, please submit the Election Form (53
KB) as mentioned in paragraph 9.9 of the Carry-Back Relief System (e-Tax
Guide, 522 KB). Please note that the election is irrevocable.
New! Option to Elect for the
Enhanced Carry-Back Relief for YA 2020 based on Estimated QD
To help businesses’ with their cash flow, bodies
of persons are given the option to elect the enhanced carry-back relief for YA
2020 based on the estimated QD before filing of YA 2020 Income Tax Returns.
Bodies of persons must make the election within
the following timeframe:
| When to make the election | Anytime before the filing of the Income Tax Return for YA 2020 |
|---|
| How to make the election | Submit the following : 1) Election Form (77KB) for Bodies of Persons for Enhanced Carry-Back of Capital
Allowances and Trade Losses; and 2) Revised tax computations for all three YAs (where applicable)
immediately preceding YA 2020. |
|---|
Once submitted, IRAS will not accept any revision
to the estimated QD until the actual filing of the income tax return. Bodies of
persons are not required to submit another carry-back relief election form when
submitting the YA 2020 income tax return (Form P1) and tax computation.
IRAS will review and process the refunds (if
any) within 3 months from the date of submission of the election form and the
revised tax computation(s).
Please refer to the e-Tax Guide on Enhanced Carry-back Relief System (487KB) for more information on the Loss Carry-back Relief for YA 2020