New loss carry-back rules have come into effect for the financial year just ended. Legislation passed last week allows companies to claim losses against earnings in previous years.Lenders are among those that stand to gain from the change. The poor cash-flow situation that many companies suffer because of the current treatment of losses limits their ability to service debt.In the initial year a transitional arrangement will apply: a one year carry-back period will be allowed for the 2012/13 income year. What this means is that a loss carry-back refund will be able to be claimed for the 2012/13 income year against tax paid in 2011/12.A two year carry-back period will apply from the 2013/14 income year onwards.An A$1 million cap will apply in each claim year to the amount of losses that any company can carry back against taxes paid in previous income years. This translates into a maximum $300,000 benefit at the current company tax rate of 30 per cent.The maximum amount of the tax value of loss carry-back cannot exceed the balance of a company's franking account at the end of the income year for which the loss carry-back is claimed. There will be a debit applied to the company's franking account balance for the tax value of each loss carry-back.Under the old rule, losses could only be claimed against future earnings.The introduction of loss carry-back rules was announced in the 2012 Budget and was first recommended by the Government's Business Tax Working Group in 2011.Deloitte's private tax partner, David Pring, said the change would be welcome, but cautioned that carry-back claims would only be available to corporate entities - not trusts, partnerships or sole traders.Pring also warned that eligibility would be subject to integrity rules in the form of a continuity of ownership test. The test will be satisfied if the same people have more than 50 per cent of the company's voting power, rights to dividends and rights to capital distribution during the ownership test period.