This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.
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Continued use of the STS accounting method
Although the STS has now ceased, you may continue using the STS accounting method for the 2009-10 income year if you:
- were an STS taxpayer for the most recent income year starting before 1 July 2005 and continued to be an STS taxpayer to the end of the 2006-07 income year and
- used the STS accounting method for the 2005-06, 2006-07, 2007-08 and 2008-09 income years
- were a small business entity in the 2007-08 income year and remained a small business entity in the 2008-09 and 2009-10 income years.
If you meet these three requirements, you can continue using the STS accounting method until you choose not to or you are no longer a small business entity.
If you continue to use the STS accounting method, you base the amounts you include at item P8 on the STS accounting method. If your accounting system or financial statements do not reflect the STS accounting method, you may need to make additional reconciliation adjustments at Reconciliation items item P8 (for more information, see Reconciliation items). If you have a particular type of ordinary income or general deduction that had to be apportioned or altered under STS - for example, double wool clips or prepayment of a business expense for a period greater than 12 months - you continue to apportion or alter them: make adjustments at Reconciliation items.
Business income and expenses that have not been accounted for using the STS accounting method - because they had not been received or paid during the previous income year - are accounted for in the current income year. You may need to make additional reconciliation adjustments at Reconciliation items.
The STS accounting method does not apply to income or deductions that receive specific treatment under income tax law - for example, net capital gains, dividends, depreciation expenses, bad debts and borrowing expenses.
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For more information about the STS accounting method, visit our website or phone the Business Infoline.
Last modified: 25 Oct 2011QC 27987