Clubs, trade associations, management corporations and town councils may carry-back unutilised capital allowances (CAs) and trade losses to reduce the amount of taxes payable over a fixed period of time.

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 from YA 2006.

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  immediately preceding that YA in which the QD are granted or incurred. For YA 2020 and YA 2021, the QD may be carried back for three YAs under the enhanced carry-back relief;

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 the QD under the enhanced carry-back relief, the carry-back shall be made in the following order: 

YA 2020

  1. Firstly, to the third YA immediately preceding YA 2020 (i.e. YA 2017);
  2. 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
  3. 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). 

YA 2021

  1. Firstly, to the third YA immediately preceding YA 2021 (i.e. YA 2018); 
  2. Secondly, where there are QD remaining after (i), the balance will be carried back to the second YA immediately preceding YA 2021 (i.e. YA 2019); and
  3. Finally, where there are QD remaining after (ii) above, the balance will be carried back to the YA immediately preceding YA 2021 (i.e. YA 2020).

YA 2022

The enhanced carry-back relief is not applicable to YA 2022.

The QD may be carried back to the immediate preceding YA (i.e. YA 2021).

6. 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 Enhanced Carry-back Relief System (PDF, 413KB).

Claiming Carry-Back Relief

To claim the carry-back relief, please submit the Election Form together with the following documents:

  • Form P1 and tax computation for the current YA; and
  • Revised tax computations for immediate preceding YA

Please note that the election is irrevocable.