This item has three sections:
The amounts to be included in the Income and Expenses sections of item P8 are amounts derived from your accounting system or financial statements, except for:
- the values of opening and closing stock, which are to be shown at tax values, and
- depreciation expenses for small business entities choosing to use the simplified depreciation rules, which are to be shown at tax values.
The income and expense amounts to be included at item P8 should form part of your profit and loss statement and are the basis for calculating your net profit or loss. You should deal with any adjustments to these amounts for tax purposes in the Reconciliation items section of item P8.
Former STS taxpayers
If you are eligible and are continuing to use the STS accounting method, you must complete the income and expenses sections using the STS accounting method. See Former STS taxpayers.
Stop
You show personal services income and related expenses at item P1, with one exception – personal services income subject to foreign resident withholding – which you show at this item.
Income
The business income to be shown at item P8 is divided into:
- income from which tax has been withheld because you did not quote your ABN to one of your payers
- gross payments subject to foreign resident withholding
- income that was subject to a PAYG voluntary agreement to withhold tax
- income received under a labour hire arrangement or from a specified payment
- assessable government industry payments, and
- other business income.
Stop
Do not show the following types of income at item P8:
- gross interest – show the amount of income at item 11 on your tax return
- dividends and franking credits – show the amounts at item 12 on your tax return
- distributions from partnerships and trusts – show these at item 13 on your tax return (supplementary section)
- gross rental or similar income that is not derived from carrying on a business of renting property, such as agistment or hire fees – show the amount at item 21 on your tax return (supplementary section)
- net capital gains – show the amount at item 18 on your tax return (supplementary section)
- PSI shown at P1
- farm management withdrawals – show the amount at item 17 on your tax return (supplementary section)
- attributed foreign income – show the amount at item 19 on your tax return (supplementary section)
- foreign source income – show the amount at item 20 on your tax return (supplementary section).
Goods and services tax
If you are registered or required to be registered for GST, the following apply:
- For income tax purposes, you should exclude GST from assessable income, exempt income and amounts received or receivable that you take into account in calculating income and deductions.
- You should reduce deductible losses and outgoings by the amount of input tax credit entitlement.
- In certain circumstances, for example, if there was a change in how much you used an asset for business purposes, an adjustment for GST purposes results in an amount being included in assessable income (if the adjustment is a GST–decreasing adjustment) or being deductible (if the adjustment is a GST–increasing adjustment).
- You should also exclude GST components under other specific rules including capital gains tax (cost base, reduced cost base, capital proceeds) and termination values.
If you are not registered or required to be registered for GST, you do not need to adjust your income and deductions for GST. You can claim the GST inclusive amount incurred on deductible outgoings.
Former STS taxpayers
If you are eligible and are continuing to use the STS accounting method, you must complete the income and expenses sections using the STS accounting method. See Former STS taxpayers.
What you may need
- Primary production worksheet. If you are a primary producer you will need this worksheet to help you work out some of the amounts in this section. The worksheet is included in Information for primary producers 2009 (NAT 1712).
- Individual PAYG payment summary schedule 2009.
Did you have amounts withheld from your business income – other than PSI included at item P1?
No |
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Yes |
Read on. |
If tax has been withheld from business income you should have received a payment summary.
You will need to complete the Individual PAYG payment summary schedule 2009 before completing item P8 if you received any of the following summaries:
- Payments under a voluntary agreement
- Payment summary – withholding where ABN not quoted
- Labour–hire firms and their workers
- Payment summary – foreign resident withholding.
A payer may issue a receipt, remittance or similar document in place of the Payment summary – withholding where ABN not quoted.
If you received income from which tax was withheld and you did not receive or have lost your payment summary, contact your payer and ask for a copy.
How to complete the Individual PAYG payment summary schedule 2009
Remember: If you have both business income (item P8) and personal services income (item P1) you will need to complete an Individual PAYG payment summary schedule 2009 for each type of income.
Step 1 Write your TFN and name in the appropriate boxes at the top of the schedule.
Step 2Nature of income – Print X in the Business income box.
Step 3 For each payment summary, transfer the following information to the schedule:
- the type of withholding – look at your payment summary carefully to determine its type and complete the TYPE box, using the following key:
V voluntary agreement
S labour hire or other specified payments
N withholding where ABN not quoted
F foreign resident withholding
- the payer's ABN or withholding payer number (WPN) and the payer's name in the appropriate boxes
- the total tax withheld in the Tax withheld box
- the gross payment in the Gross payment box.
Step 4 Check that you have recorded details from all relevant payment summaries on your payment summary schedule then attach the schedule to page 3 of your tax return.
Do not attach the payment summaries to your tax return. You must keep them for a period of five years.
Payers must report to the Tax Office details of payments where amounts of tax have been withheld. This information will be cross-checked with that on your tax return to ensure that you have declared the correct amount of income and the correct amount of tax withheld.