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  • Application for a substituted accounting period (SAP)

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

    • apply for a substituted accounting period (SAP)
    • change from a SAP back to a normal accounting period ending 30 June.

    How to obtain this form

    Download this form in portable document format (PDF) – Application for a substituted accounting period (SAP) (NAT 5087, PDF 1.82MB)This link will download a file.

    Instructions

    Complete the form on your computer as your answers will choose which questions appear. The form also instructs you to attach additional information with your application to ensure it can be properly considered.

    The application must be lodged and signed by either:

    • the entity’s registered tax agent
    • the public officer
    • a partner of the entity if the entity is a partnership
    • the trustee of a trust if the entity is a trust. If the trustee is a company, the public officer of the trustee company.

    Instructions on updating public officer details are at Updating your details.

    You can lodge your application either:

    • via Online services for agents or the Business Portal
      • when sending a new message, categorise the message as:
        Topic name: Income tax
        Subject – Substituted Accounting Period (SAP)
      • attach the saved PDF form and supporting information.
    • by post to

      Australian Taxation Office
      PO Box 3000
      PENRITH NSW 2740.

    We may contact you if further information is required to process your SAP application. We aim to communicate the outcome to you in writing within 28 days of receiving your application.

    Detailed instructions

    Reason for a SAP and supporting evidence

    Law Administration Practice Statement PSLA 2007/21 Substituted Accounting Periods provides comprehensive guidance on the circumstances which warrant the granting of a SAP.

    SAPS are granted where the entity can demonstrate its circumstances take the case out of the ordinary run.

    This includes the need to synchronise your balance dates with that of either:

    • the controlling entity of your economic group or the entity that holds the majority of your membership interests
    • the need to align your accounting date with the income tax consolidated group you have just exited to reflect that your accounting systems are set up to meet the former income tax consolidated group’s reporting requirements
    • an ongoing event, industry practice, business driver or other ongoing circumstance that makes 30 June impractical as a basis to calculate taxable income. This would include difficulties with ascertaining inventory for stock valuations, and having multiple financial reporting requirements (for example, a franchise to a franchisee).

    Circumstances generally not outside the ordinary run include:

    • strata or owners corporations wishing to align their balance date with their audit date
    • companies wishing to align their balance date with a change of company financial year election sent to the Australian Securities and Investment Commission.

    It is not envisaged that the circumstances of individuals would fall outside the ordinary run.

    Subsidiary members of income tax consolidated groups do not need to apply for a SAP as they do not have income tax reporting obligations.

    Lodging the form

    A SAP application should be lodged as soon as possible. To ensure the lodgment date can be updated in ATO systems before it passes, a SAP application should be lodged at least 28 days before the earlier of either:

    • the due date for lodgment of the income tax return for the current accounting period
    • the due date for lodgment of the tax return for the proposed new accounting period.

    Retrospective or out of date applications may be accepted in limited circumstances. See PSLA 2007/21 for more information.

    Transitional periods – examples

    Where an entity is allowed to adopt a SAP there is a change to the end date of its accounting period, which results in a transitional period of more or less than 12 months.

    The application form automatically calculates the end of the transitional period.

    First time lodgers

    For entities that adopt a SAP for their first lodgment of an income tax return, the transitional period will begin on the date the entity commenced trading and end on the first occurrence of the SAP balance date. It will always be less than 12 months.

    Example 1

    Entity A commenced trading on 12 February 2008 and requests a 31 December balance date. Its transitional year will be from 12 February 2008 to 31 December 2008 (11 months). This will constitute the 2009 tax year.

    End of example

     

    Example 2

    Entity B commenced trading on 27 September 2011 and requests a 31 October balance date. Its transitional year will be from 27 September 2011 to 31 October 2011 (one month) and will constitute the 2011 tax year.

    End of example

    Existing entities

    For existing entities that have lodged previous income tax returns, the length of the transitional period is determined by the table in paragraph 4F of PSLA 2007/21. The application form automatically calculates the end of the transitional period when you enter the prompted dates and tick the relevant box describing your entity’s transition on the application form.

    Example 1

    Entity A balances on 30 June 2009 and requests a 31 December balance date (select: 31 January – 30 September balancer transitioning to a 31 December balance date). Its transitional year will be from 1 July 2009 to 31 December 2009, constituting the 2010 tax year.

    End of example

     

    Example 2

    Entity B balances on 31 March 2015 and requests a 30 September balance date (select: All other transitions). Its transitional year will be from 1 April 2015 to 30 September 2016, constituting the 2016 tax year.

    End of example

     

    Example 3

    Entity C balances on 30 June and requests a 31 March balance date (select: All other transitions). Its transitional year will be from 1 July 2016 to 31 March 2017, constituting the 2017 tax year.

    End of example

     

    Example 4

    Entity D balances on 31 October 2017 and requests a 31 December balance date (select: All other transitions). This would ordinarily result in a two-month transitional period, which is acknowledged by the Commissioner of Taxation as an inconveniently short transitional period. Per the table, its transitional year will instead be from 1 November 2017 to 31 December 2018, constituting the 2019 tax year. It will therefore ‘skip’ the 2018 income year.

    End of example

    Transitional periods and exiting consolidated groups

    Entities exiting income tax consolidated groups retain the balance date that they had prior to entering the income tax consolidated group. As such, the table in paragraph 4F of PSLA 2007/21 applies based on their prior balance date.

    If an entity exiting an income tax consolidated group seeks to lodge for a period from their date of exit until their requested SAP, the transitional period may occur while the entity remains in the income tax consolidated group. As the entity does not have income tax obligations at this time, the SAP will only come into effect on exit. The following two examples demonstrate this.

    Example 1: Exiting a consolidated group

    Entity A balances on 30 June 2018 prior to entering an income tax consolidated group. It exits the income tax consolidated group on 23 May 2018. It subsequently requests a 31 December balance date.

    Ordinarily, applying the table in PSLA 2007/21, Entity A is required to lodge a return as a standalone entity for the period from 23 May 2018 to 30 June 2018, constituting the 2018 tax year. It would then lodge a return for the transitional period from 1 July 2018 to 31 December 2018, constituting the 2019 tax year. This is because a transitional period of six months applies when moving from a 30 June to a 31 December balance date.

    Entity A however wishes to lodge for a period from 23 May 2018 to 31 December 2018. To accommodate this, Entity A requests a transitional period of 1 July 2017 to 31 December 2017. The following tax year for Entity A is from 1 January 2018 to 31 December 2018, constituting the 2019 tax year.

    A granting of this SAP ensures that when Entity A exits the income tax consolidated group, its first tax return as a standalone entity is for its requested period. This period effectively commences on exit of the income tax consolidated group on 23 May 2018 (being the day it resumes its income tax obligations) up to its requested SAP of 31 December 2018.This constitutes its 2019 tax year.

    End of example

     

    Example 2: Exiting a consolidated group

    Entity B balances on 30 June prior to entering an income tax consolidated group. The group balances on 30 November. When Entity B leaves the group on 1 June 2018, it retains its 30 June balance date. Entity B then requests a 30 November balance date as its systems are currently set up to report on that basis.

    The table in PSLA 2007/21 states that there is a 17-month transitional period when moving from a 30 June balance date to a 30 November balance date. There are two options available to Entity B, who can either:

    • lodge a 2018 return for the period ending 30 June 2018 (consisting of one month) as this is its current balance date, before implementing a 17-month transitional period from 1 July 2018 to 30 November 2019, constituting the 2019 year
    • request a transitional period from 1 July 2017 (while Entity B is in the income tax consolidated group) to 30 November 2018, constituting the 2018 year. This gives Entity B an effective reporting period of 1 June 2018 to 30 November 2018 for the 2018 tax year.
    End of example
    Last modified: 18 May 2020QC 27392