Entities with a substituted accounting period

How to apply for a substituted accounting period (SAP), how to lodge a return and what to consider when lodging early.

On this page

• Applying for a SAP
• Lodging your income tax return with a SAP
• Lodging additional information for early balancers
• Tax return label changes
• Tax return instructions for SAPs

Applying for a SAP

An entity's accounting period is ordinarily the 12 month period ending on 30 June.

You can seek leave from the Commissioner to adopt an alternative annual accounting period or a SAP.

Use the Application for a substituted accounting period (NAT 5087) form to:

• apply for a SAP
• revert to a standard accounting period ending 30 June.

When you apply, you must provide:

• a reason for requesting a SAP
• supporting evidence.

For detail on what supporting evidence you need to provide and why it's important to lodge as early as possible, see Applying for a SAP.

See Law Administration Practice Statement PS LA 2007/21 Substituted Accounting Periods for guidance on circumstances that warrant granting a SAP.

We accept retrospective or out of date applications in limited circumstances. See PS LA 2007/21 for details.

Lodging your income tax return with a SAP

If you have been granted leave to adopt a SAP, you must meet different lodgment requirements. Find out your lodgment date, lodgment channels, tax agent concessions and see more about how SAPs work.

Transitioning to a SAP

When you adopt a SAP, the end date of your accounting period changes. This usually results in a transitional period of more or less than 12 months. You must lodge an income tax return for the transitional period.

We will determine and notify you of your transitional period when we approve your SAP.

To better understand your transitional period, see examples of transitional periods for scenarios including:

• first time lodgers
• existing entities
• entities exiting consolidated groups.

When you have adopted a SAP, the new accounting period will involve either late or early balancing in relation to a 30 June year end. Whether you are late or early is determined when your application is approved.

For more on how and when an entity transitions to a SAP, see PS LA 2007/21.

What tax return form to use

Prepare your tax return on the form for the year in lieu of which the accounting period has been adopted. For example, if you adopted a SAP ending 31 December 2022 you are an early balancer and your transitional period is in lieu of the following income year ending 30 June, being the year ended 30 June 2023. This means you should prepare your tax return on the 2023 tax return form.

We make every effort to release tax time stationery as early as possible. However, if the relevant form has not been produced by the date you wish to lodge, you must use the most recently available tax return form, whether lodging electronically or by paper.

If you are transitioning to a SAP, you must lodge a paper form if you are:

• not lodging the entity's first tax return
• lodging before we release next year's tax time stationery.

See more about what tax return form to use and Example 5 - early December SAP.

Franking period

Your transitional period will affect your franking period.

For a corporate tax entity that is not a private company, the franking period depends on the length of its income year. The franking period is different for an early or late balancing corporate tax entity that has adopted a SAP.

Lodging additional information for early balancers

Tax return labels may change on the release of new stationery.

If you are an early balancer and lodged using the most recent tax return form, you may need to lodge an amendment if label changes are relevant to your circumstances.

We expect to publish draft details of tax return label changes each year in December. Where further changes are required due to law changes not currently known or anticipated, we will update the tax return label changes and provide further advice.

Tax return label changes

To help early balancers, each year we provide information on label changes we expect in the new tax time stationery to be released at the end of May. While tax returns can be lodged from 1 January, our processing for the new labels will not take place before our system is deployed in June 2023.

Company tax return 2023

Explanation

The loss carry back scheme has been extended to 30 June 2023. As such, extra labels will be added to account for losses incurred in the 2022–23 year.

The company can choose to carry-back tax losses from the 2022–23 income year on the 2023 Company tax return.

Processing for new loss carry back labels will not take place until the 2023 system change is deployed in June 2023.

New measures

There are some new measures, including the Digital Games Tax Offset (DGTO).

Note: this is not yet law (as at 9 December 2022).

R&D Tax incentive schedule 2023

Tax return instructions for SAPs

You should consider if any of these specific tax return instructions apply:

• Research and development tax incentive schedule instructions for early balancing substituted accounting period (SAP) entities 2022
• Reportable tax position schedule