The ATO understands the way some businesses operate has been impacted as a result of COVID-19.
Some of these impacts may have resulted in changes that affect whether they are able to utilise their carried-forward losses in the current or a future income year.
For companies to utilise their carried-forward losses in a particular year, they need to satisfy the continuity of ownership test or, if they fail that test, they need to satisfy the business continuity test (‘BCT’).
Whether a company can utilise carried-forward losses requires a consideration of its facts and circumstances.
Generally, a company that has completely closed its business with no intention to resume will fail the BCT. However, a company that has temporarily closed its business may still be able to satisfy the BCT.
Importantly, the mere receipt of JobKeeper payments will not cause a company to fail the BCT.
Disclaimer
This publication is intended as a general commentary only and does not purport to be comprehensive. It should not be regarded as tax advice and you should not act solely on the information contained herein. Please contact AscendPoint to further discuss about your circumstances or concerns.