Current period loss
In a situation where, at the end of the year, an enterprise’s expenses exceed income, or there is no income at all, a loss occurs. If the loss occurred in the reporting period (quarter, half-year, 9 months), then there is no need to transfer an advance payment for this period. But at the end of the year the situation is somewhat different. If the organization had no income at all for the entire reporting year, then no tax is transferred. And if there was income, even if it was less than expenses, then a tax in the amount of 1% of income will have to be transferred to the budget. This is the minimum tax according to the simplified tax system. Also read the article: ⇒ “Expenses under the simplified tax system in 2020.”
Features of loss accounting
Losses can be taken into account in tax calculations only at the end of the year. This cannot be done when calculating an advance payment based on the results of a quarter, half a year or 9 months. This is one of the features of loss transfer for. Organizations using the general regime can do this without waiting for the end of the tax period. They have the right to do this already based on the results of the first quarter. When calculating the amount of the annual payment, organizations using the simplified tax system have the right to take into account the loss of previous years. A loss can be carried forward for no more than 10 years. Thus, the loss received in 2020 can be taken into account until 2027. But if the loss is not written off in full by 2027, it will no longer be possible to write it off and it will remain outstanding.
One of the conditions for reducing the tax base by the amount of a loss is its documentary confirmation.
You can confirm your loss: (click to expand)
- primary documents (invoice, act, etc.);
- copies of tax returns;
- books of income and expenses.
Such documents must be stored for no less than the period during which they can be used for transfer. That is, even if the period for storing documents according to the law allows them to be destroyed or transferred to the archive, they will have to be preserved for the entire period of transferring the loss. In addition, these documents are additionally stored for another 4 years. The Ministry of Finance clarifies this in letter No. 03-03-06/1/278 dated May 25, 2012. Thus, the total storage period of the document confirming the loss is 14 years.
The loss can be taken into account as a whole amount in the current period, or the balance can be transferred to any permitted year (within 10 years). Moreover, losses received in several periods are taken into account in the order in which they were received. That is, the loss that occurred earlier in time will be taken into account first.
Also read the article: ⇒ “Annual tax under the simplified tax system in 2020.”
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“Simplified”: problems of accounting for the minimum tax and losses
Vladimir MALYSHKO, PBU expert
Taxpayers who apply a simplified taxation system with the object of taxation being income reduced by the amount of expenses will, in some cases, be forced to pay a minimum tax at the end of the tax period. This will happen if the amount of the single tax calculated in the general manner for the tax period does not exceed the amount of the minimum tax. The minimum tax itself is 1% of income determined in accordance with Article 346.15 of the Tax Code of the Russian Federation (clause 6 of Article 346.18 of the Tax Code of the Russian Federation).
Income under “simplified taxation” includes income from sales, calculated in accordance with Article 249 of the Tax Code of the Russian Federation, and non-operating income, determined in accordance with Article 250 of the Tax Code of the Russian Federation. At the same time, income provided for in Article 251 of the Tax Code of the Russian Federation, as well as income in the form of dividends received, if their taxation was carried out by a tax agent in accordance with the provisions of Articles 214 and 275 of the Tax Code of the Russian Federation, are not included in the countable income (clause 1 of Article 346.15 of the Tax Code of the Russian Federation).
