Business and professional items – items 37 to 51

Instructions to complete items 37 to 51 in the tax return relating to business and professional items for the trust.

37 Business name of main business

The business name of the main business activity should be consistent from year to year, except in the year of a name change or if it is no longer the main business.

If the business name is legally changed, send written advice of the change to us when the change is made. Print the current business name on the tax return.

38 Business address of main business

Print the street address of the main business. This is the place where most of the business decisions are made. Ensure that you include the postcode at label A Postcode.

39 Opening stock

Print at label C Opening stock the total value of all trading stock on hand at the beginning of the income year or accounting period for which the trust tax return is being prepared. The amount shown by the trust at label C is the calculated value for income tax purposes under section 70–40, or for small business entities using the simplified trading stock rules subsection 328-295(1) of the ITAA 1997. The opening value of an item of stock must equal its closing value in the previous year.

If you did not have any trading stock in the previous year, the value of trading stock at the start of the year is zero. This might occur:

• in the case of a new business
• in the first year you have trading stock, or
• where the trading stock rules for small business entities cease to apply, either because the entity is no longer eligible to be a small business entity or because the entity chooses to account for changes to trading stock.

Include motor vehicle floor plan stock and work in progress of manufactured goods.

Do not include any amount that represents opening stock of a business that started operations during the income year. Show this amount at item 5 Business income and expenses – label E Cost of sales.

40 Purchases and other costs

Print at label B Purchases and other costs the cost of direct materials used for manufacture, sale or exchange in deriving the gross proceeds or earnings of the business.

Former STS taxpayers still using the STS accounting method

If the trust is eligible and has chosen to continue using the STS accounting method, only show at label B purchases and other costs which the trust has paid. For more information, see Appendix 13.

41 Closing stock

If the trust is a small business entity choosing to use the simplified trading stock rules, see the information for small business entities below. Otherwise, go to All other businesses.

Small business entities

Small business entities only need to account for changes in the value of trading stock if the value of stock on hand at the start of the income year and a reasonable estimate of the value of stock on hand at the end of the income year varies by more than $5,000.

For more information, see Simplified trading stock rules.

Small business entities who wish to do so can still conduct a stocktake and account for changes in the value of trading stock.

If the difference between the value of opening stock and a reasonable estimate of closing stock is:

• more than $5,000 the trust must account for the change in the value of trading stock, go to step 2
• $5,000 or less, go to step 1.

Step 1

If the difference referred to above is $5,000 or less and the trust chooses not to account for this difference, the closing stock value at label D is the same as the value at item 39 Opening stock – label C. Do not put the reasonable estimate at label D.

Print in the CODE box at the right of label D the code letter from table 7 that matches the code the trust used to value closing stock in the previous year.

Table 7: Valuation method

Code	Valuation method
C	Cost
M	Market selling value
R	Replacement value

If this is the trust’s first year in business the value of the closing stock will be zero. Print C in the CODE box.

Step 2

If the difference referred to above is more than $5,000 or the trust chooses to account for the difference in trading stock, the closing stock values must be brought to account under section 70-35 of the ITAA 1997. See the information for All other businesses for instructions on how to calculate the value of closing stock.

The trust must include in the closing stock value at label D the value of all stock on hand, regardless of whether the trust has paid for the stock.

All other businesses

Print at label D the total value of all trading stock on hand at the end of the income year or accounting period for which the trust tax return is being prepared. The amount at label D is the value calculated for income tax purposes under section 70-45 of the ITAA 1997.

If the trust is registered for GST, the value of closing stock (other than items the supply of which was not a taxable supply) should not include an amount equal to the input tax credit that would arise if the trust had acquired the item solely for business purposes at the end of the income year. Input tax credits do not arise for some items of trading stock, such as shares.

Include motor vehicle floor plan stock and work in progress of manufactured goods.

Do not include any amount for closing stock of a business that ceased operations during the income year, instead, show this amount at item 5 Business income and expenses – label Total business income.

Print in the CODE box the code from table 7 indicating the method used to value closing stock for income tax purposes. If you use more than one method, use the code for the method representing the greatest value.

You can use different methods to value the same item of trading stock in different income years, and you can value similar items using different methods in the same income year.

However, the opening value of an item in a particular income year must equal the closing value for that item in the previous income year. The trust cannot reduce the value of stock on hand by creating reserves to offset falls in the value of stock or any other factors. Keep records showing how each item was valued.

The trust may elect to value an item of trading stock below the lowest value calculated by any of these methods because of obsolescence or other special circumstances. The value in the election must be reasonable. If you elect to value an item of trading stock below cost, market selling value and replacement value, see item 48 Trading stock election.

If you include incorrect trading stock information on the tax return, advise us by submitting a full statement of the facts, accompanied by a reconciliation of the value of stock as returned for each income year with the values permissible under the law.

Trusts engaged in manufacturing include the value of partly manufactured goods as part of their stock and materials on hand at the end of the income year.

For more information on the circumstances that packaging items held by a manufacturer, wholesaler or retailer are trading stock as defined in section 70-10 of the ITAA 1997, see TR 98/7 Income tax: whether packaging items (i.e., containers, labels, etc.) held by a manufacturer, wholesaler or retailer are trading stock.

42 Trade debtors

Print at label E Trade debtors the total amounts owing to the trust at year end for goods and services provided during the income year, that is, current trade debtors. Include this amount at item 33 All current assets – label F.

43 Trade creditors

Print at label H Trade creditors the total amounts owed by the trust at year end for goods and services received during the income year, that is, current trade creditors. Include this amount at item 35 All current liabilities.

44 Total salary and wage expenses

Print at label L Total salary and wage expenses the total salary, wages and other labour costs actually paid or payable to people employed in the trust’s business. However, exclude those costs for private domestic assistance or which form part of capital expenditure, as they are not deductible.

You can only claim a deduction for a payment made or liability incurred by a trust to an associated person, principal, agent, related entity or associate entity if it is incurred in producing assessable income and we are satisfied that the amount is reasonable.

These expenses include any salary and wage component shown in item 5 Business income and expenses – label E Cost of sales. This includes:

• allowances
• bonuses
• casual labour
• retainers and commissions paid to people who received a retainer
• workers’ compensation paid through the payroll
• direct and indirect labour costs
• directors’ fees
• holiday pay
• locums
• long service leave
• lump sum payments
• other employee benefits
• overtime
• payments under an incentive or profit-sharing scheme
• retiring allowances
• sick pay.

Include here and at item 45 Payments to associated persons – label M any salary or wages paid to an associated person, principal, agent, related entity or associate entity.

However, these expenses do not include:

• agency fees
• contract payments
• sub-contract payments
• service fees
• superannuation
• management fees
• consultant fees.

You cannot deduct salary and wage expenses where you have not complied with your PAYG withholding obligations. For more information, see Removing tax deductibility of non-compliant payments.

Print in the CODE box the code from table 8 that shows where you predominantly reported salary and wage expenses.

Table 8

Salary and wages wholly or predominantly reported in	Code
the expense component of Cost of sales	C
All other expenses	A
the expense component of both Cost of sales and All other expenses	B
neither Cost of sales nor All other expenses	O

For more information on paying salary and wages in crypto, see Paying salary or wages in cryptocurrency.

45 Payments to associated persons

Print at label M Payments to associated persons the amounts, including salaries, wages, commissions, superannuation contributions or allowances, paid to the trustee's relatives or partnerships in which the relative of the trustee is a partner.

Also include the amounts of salaries and wages paid to an associated person, relative, principal, agent, related entity or associate entity at item 44 Total salary and wage expenses – label L.

Record keeping

Excessive payments to a relative or other related entity may not be deductible; see section 26-35 of the ITAA 1997. Keep a record of the following to establish the reasonableness of remuneration:

• full name of relative or other related entity
• relationship
• age, if under 18 years old
• nature of duties performed
• hours worked
• total remuneration
• salaries or wages claimed as deductions
• other amounts paid, for example retiring gratuities, bonuses and commissions.

For more information on paying salary and wages in crypto, see Paying salary or wages in cryptocurrency.

46 Fringe benefit employee contributions

Print at label T Fringe benefit employee contributions all payments the trust has received from recipients of fringe benefits.

Employee contributions form part of the employer’s or associate’s assessable income in situations where employees make payments for fringe benefits they have received.

47 Unpaid present entitlement to a private company

Print at label Y Unpaid present entitlement to a private company any amounts of the income of the trust from this year or a previous year of income to which a private company is entitled, and that remain unpaid by the lodgment day. If the amount is greater than zero, print D in the CODE box at the right of label Y where, during the income year, the trustee of the trust estate:

• made a payment that is attributable to an unrealised gain that discharged or reduced a present entitlement
• made a loan
• forgave a debt

in favour of a shareholder (or an associate of a shareholder) of a private company with the unpaid present entitlement. Print X in the CODE box at the right of label Y if none of the above transactions took place.

Lodgment day

The lodgment day is the earlier of the due date for lodgment and date of lodgment of the trust’s tax return for the income year in which the payment, loan or debt forgiveness occurred.

48 Trading stock election

The trust may elect to value an item of trading stock below the lowest value of cost, market selling value, or replacement value, because of obsolescence or any other special circumstances. The value it elects must be reasonable. For more information on trading stock valuations where obsolescence or other special circumstances exist, see TR 93/23 Income tax: valuation of trading stock subject to obsolescence or other special circumstances.

• No – Print X in the No box.
• Yes – Print X in the Yes box if the trust makes an election.

49 Aggregated turnover

Select your aggregated turnover range

You must complete item 49 Aggregated turnover if you are making a claim in your tax return for any of the following:

• temporary full expensing
• any of the small business entity concessions.

Select a category code from the table below based on your aggregated turnover range and print the category code you select at item 49 Select your aggregated turnover range – label P on your tax return. You can use either your 2021–22 aggregated turnover or your 2020–21 aggregated turnover. For more information, see Aggregation.

Category code	Aggregated annual turnover range
A	$0 to less than $7.5 million
B	$7.5 million to less than $10 million
C	$10 million to less than $20 million
D	$20 million to less than $40 million
E	$40 million to less than $50 million
F	$50 million to less than $100 million
G	$100 million to less than $200 million
H	$200 million to less than $300 million
I	$300 million to less than $400 million
J	$400 million to less than $500 million
K	$500 million to less than $600 million
L	$600 million to less than $700 million
M	$700 million to less than $800 million
N	$800 million to less than $900 million
O	$900 million to less than $1 billion
P	$1 billion or over

You will not be penalised for specifying an incorrect category where you make your best attempt to calculate your aggregated turnover.

For more information about calculating your aggregated turnover, see Aggregation.

Aggregated turnover

Did you select category P from the table above or are you a significant global entity?

• No – Go to item 50 Capital allowances.
• Yes – Print at label Q Aggregated turnover your actual aggregated turnover rounded to the nearest $100 million. You can use either your 2021–22 aggregated turnover or your 2020–21 aggregated turnover.

For more information, see Satisfying the aggregated turnover threshold.

You will not be penalised for specifying an incorrect amount where you make your best attempt to calculate your aggregated turnover.

50 Capital allowances

Item 50 deals with the following:

• Record keeping
• Small business entities
• Depreciating assets first deducted in 2021–22
• Temporary full expensing of depreciating assets
• For all depreciating assets

Record keeping

For more information, see Record keeping for capital expenses.

Small business entities

Are you a small business entity using the simplified depreciation rules?

• No – Go to Depreciating assets first deducted in 2021–22
• Yes – Read on

Print at label S Temporary full expensing deductions the total amount of any deduction under temporary full expensing you claimed at item 5 Business income and expenses – label K Depreciation expenses.

Print at label T Number of assets you are claiming for the total number of any assets you are claiming temporary full expensing for.

You will not be penalised for specifying an incorrect amount at label S and T where you have made your best attempt to determine the amounts you are claiming for.

You have completed item 50 Capital allowances. Go to item 51 Small business entity simplified depreciation.

Depreciating assets first deducted in 2021–22

Intangible depreciating assets first deducted

Print at label A Intangible depreciating assets first deducted the cost of all intangible depreciating assets for which the trust is claiming a deduction for decline in value for the first time. If the trust has allocated any intangible depreciating assets with a cost of less than $1,000 to a low-value pool for the income year, include the cost of those assets at label A. Do not reduce the cost for estimated non-taxable use.

Do not include expenditure on in-house software which has been allocated to a software development pool at label A.

Include here the cost of intangible assets for which you are claiming an immediate deduction under temporary full expensing.

The following intangible assets are regarded as depreciating assets (providing they are not trading stock):

• certain items of intellectual property, such as patents, registered designs, copyrights and certain types of licences
• computer software, or a right to use computer software, that the trust acquires, develops or has someone else develop for its own use (that is, in-house software)
• mining, quarrying or prospecting rights and information
• spectrum licences
• datacasting transmitter licences
• certain indefeasible rights to use telecommunications cable systems (IRUs)
• some access rights to telecommunications sites.

A depreciating asset that the trust holds starts to decline in value from the time the trust uses it (or installs it ready for use) for any purpose, including a private purpose. However, the trust can only claim a deduction for the decline in value to the extent it uses the asset for a taxable purpose, such as for producing assessable income.

For more information on decline in value, cost, low-value pools, in-house software and software-development pools, see Guide to depreciating assets 2022.

Other depreciating assets first deducted

Print at label B Other depreciating assets first deducted the cost of all depreciating assets (other than intangible depreciating assets) for which the trust is claiming a deduction for the decline in value for the first time. If any assets (other than intangible depreciating assets) costing less than $1,000 have been allocated to a low-value pool for the income year, also include the cost of those assets at label B. Do not reduce the cost for any estimated non-taxable use.

Include here the cost of assets for which the trust is claiming an immediate deduction under temporary full expensing.

A depreciating asset the trust holds starts to decline in value from the time the trust uses it (or installs it ready for use) for any purpose. However, the trust can only claim a deduction for the decline in value to the extent it uses the asset for a taxable purpose, such as for producing assessable income.

For more information, see Guide to depreciating assets 2022.

Self-assessment of effective life

For most depreciating assets, you can choose to either:

• work out the effective life yourself (self-assess)
• use an effective life determined by the Commissioner.

If you have adopted the Commissioner’s effective life determination for all your depreciating assets print X in the No box at label C Have you assessed the effective life of any of these assets?

If you have self-assessed the effective life of any of your depreciating assets, print X in the Yes box at label C.

Temporary full expensing of depreciating assets

Are you making a choice to opt out of temporary full expensing for some or all of your eligible assets?

You can choose to opt out of temporary full expensing on an asset–by-asset basis in the income year it was acquired and apply the other depreciation rules to that asset. You make this choice for a particular depreciating asset for each applicable income year. Once a choice is made it cannot be revoked.

Print at label P Are you making a choice to opt out of temporary full expensing for some or all of your eligible assets?:

• A if you are opting out for some of your assets
• B if you are opting out for all of your assets.

For more information, see Temporary full expensing.

Number of assets you are opting out for

Print at label Q Number of assets you are opting out for the number of assets for which you made the choice to opt out of temporary full expensing.

Value of assets you are opting out for

Print at label R Value of assets you are opting out for the value of the assets for which you made the choice to opt out of temporary full expensing. The value is the amount you would have otherwise claimed for these assets under temporary full expensing if you had not made the choice to opt out.

You will not be penalised for specifying an incorrect amount at label Q and R where you have made your best attempt to determine the amounts you are opting out for.

Temporary full expensing deductions

Print at label S Temporary full expensing deductions the total value of the deductions that you are claiming under temporary full expensing.

Number of assets you are claiming for

Print at label T Number of assets you are claiming for the number of assets for which you are claiming temporary full expensing.

You will not be penalised for specifying an incorrect amount at label S and T where you have made your best attempt to determine the amounts you are claiming for.

For all depreciating assets

Recalculation of effective life

Print X in the No box at label D Did you recalculate the effective life for any of your assets this year?, if you have not recalculated the effective life of any of your depreciating assets in this income year.

Print X in the Yes box at label D, if you have recalculated the effective life of any of your depreciating assets in this income year.

You may recalculate the effective life of assets in certain circumstances if the effective life you have been using is no longer accurate. There are also circumstances where you must recalculate the effective life of a depreciating asset.

Total adjustable values at end of income year

Print at label E Total adjustable values at end of income year, the total of the adjustable values of your depreciating assets as at the end of the income year. This is the value of all assets costs (first and second elements) less any decline in value up to that time, or the closing value of all assets.

If the trust has allocated any assets with a cost of less than $1,000 to a low-value pool, do not include the adjustable values of those assets at label E.

Assessable balancing adjustments on the disposal of intangible depreciating assets

Print at label F Assessable balancing adjustments on the disposal of intangible depreciating assets the total assessable income you have from balancing adjustment events on the disposal of intangible depreciating assets that occurred this income year (this type of assessable income may arise if, for example, you disposed of an intangible depreciating asset for more than its adjustable value). If you do not have any assessable balancing adjustment amounts for intangible assets this year, leave label F blank.

If the trust has allocated any assets with a cost of less than $1,000 to a low-value pool, do not include the assessable balancing adjustments for these assets at label F.

Deductible balancing adjustments on the disposal of intangible depreciating assets

Print at label G Deductible balancing adjustments on the disposal of intangible depreciating assets the total deductible amount you have from balancing adjustment events on the disposal of intangible depreciating assets that occurred this income year (this type of deduction may arise if, for example, you disposed of an intangible depreciating asset for less than its adjustable value). If you do not have any deductible balancing adjustment amounts for intangible assets this year, leave label G blank.

If the trust has allocated any assets with a cost of less than $1,000 to a low-value pool, do not include the assessable balancing adjustments for these assets at label G.

Termination value of intangible depreciating assets

Print at label H Termination value of intangible depreciating assets the termination value of each balancing adjustment event occurring for intangible depreciating assets to which the uniform capital allowances rules applied, including assets allocated to a low-value pool.

Do not show at label H any consideration received during the income year for in-house software for which the trust has allocated expenditure to a software development pool.

A balancing adjustment event occurs if:

• you stop holding the asset; or
• you stop using it and expect never to use it again; or
• you have not used it and you decide never to use it.

A balancing adjustment event may occur in a year after the trust claims temporary full expensing for an asset, on either the cost of acquisition or improvements. If so, the trust will need to calculate a balancing adjustment amount.

Any non-taxable use of an asset in an income year after the year in which temporary full expensing has been claimed will not reduce balancing adjustment amounts for balancing adjustment events happening after the claim year.

For more information, see Working out your deduction.

Generally, the termination value is the amount the trust receives or is deemed to receive for the balancing adjustment event. It includes the market value of any non-cash benefits, such as goods and services the trust receives for the asset.

For more information, see Guide to depreciating assets 2022.

A special balancing adjustment event will also occur in an income year after the year in which temporary full expensing has been claimed when:

• it is no longer reasonable to conclude that you will use the depreciating asset principally in Australia for the principal purpose of carrying on a business; or
• it becomes reasonable to conclude that the depreciating asset will never be located in Australia.

This special balancing adjustment event is not triggered with respect to trusts using the simplified depreciation rules, other than for those depreciating assets that are excluded from the simplified depreciation rules. For those other depreciating assets, the event may still be triggered if temporary full expensing has been claimed with respect to that asset.

If this special balancing adjustment event is triggered:

• the trust is treated as though it had ceased to hold the asset and the termination value of the asset will be equal to its market value at that time, resulting in the temporary full expensing deduction being clawed back to the extent of the assets then market value; and
• the first element of cost is modified so that the first element of cost of the asset is the asset’s termination value at the time of the event, such that though the trust may not thereafter work out the decline in value for that asset using temporary full expensing, the trust might, in a later income year, be entitled to claim other capital allowances it is entitled to for that asset (for example, under the general capital allowances rules for the proportion of business use). The trust may not claim a deduction for the asset under the general capital allowance rules in the same year as the special balancing adjustment event.

Termination value of other depreciating assets

Print at label I Termination value of other depreciating assets the termination value of each balancing adjustment event occurring for depreciating assets, including assets allocated to a low-value pool.

Do not show at label I any consideration received during the income year for:

• depreciating assets allocated in a prior year to the general small business pool
• intangible depreciating assets
• buildings or structures for which a deduction is available under the capital works provisions
• assets used in research and development (R&D) activities, or
• assets falling within the provisions relating to investments in Australian films.

A balancing adjustment event occurs if the trust stops holding or using a depreciating asset and expects never to use it again, or decides not to use it in the future, for destroyed. Generally, the termination value is the amount the trust receives or is deemed to receive for the balancing adjustment event. It includes the market value of any non-cash benefits, such as goods and services the trust receives for the asset.

A balancing adjustment event may occur in a year after the trust claims temporary full expensing for an asset, on either the cost of acquisition or improvements. If so, the trust will need to calculate a balancing adjustment amount.

Any non-taxable use of an asset in an income year after the year in which temporary full expensing has been claimed will not reduce balancing adjustment amounts for balancing adjustment events happening after the claim year.

For more information, see Working out your deduction.

For more information on balancing adjustment events and termination value, see Guide to depreciating assets 2022.

A special balancing adjustment event will also occur in an income year after the year in which temporary full expensing has been claimed when it is no longer reasonable to conclude that:

• the trust will use the depreciating asset principally in Australia for the principal purpose of carrying on a business; or
• the depreciating asset will never be located in Australia.

This special balancing adjustment event is not triggered with respect to trusts using the simplified depreciation rules, other than for those depreciating assets that are excluded from the simplified depreciation rules. For those other depreciating assets, the event may still be triggered if temporary full expensing has been claimed with respect to that asset.

If this special balancing adjustment event is triggered:

• the trust is treated as though it had ceased to hold the asset and the termination value of the asset will be equal to its market value at that time, resulting in the temporary full expensing deduction being clawed back to the extent of the assets then market value; and
• the first element of cost is modified so that the first element of cost of the asset is the asset’s termination value at the time of the event, such that though the trust may not thereafter work out the decline in value for that asset using temporary full expensing, the trust might, in a later income year, be entitled to claim other capital allowances it is entitled to for that asset (for example, under the general capital allowances rules for the proportion of business use). The trust may not claim a deduction for the asset under the general capital allowance rules in the same year as the special balancing adjustment event.

Subsequent year accelerated depreciation deductions for assets using Backing business investment

If you are a trust that used the Backing business investment – accelerated depreciation in 2020–21 for one or more assets, print at label N Subsequent year accelerated depreciation deductions for assets using Backing business investment the amount of depreciation you claim in 2021–22.

This is the second year depreciation amount claimed for all assets for which you used Backing business investment – accelerated depreciation in 2020–21.

Deduction for project pool

Print at label J Deduction for project pool the trust's deductions for project pools. For more information, see Appendix 6.

For more information on project pools, see Guide to depreciating assets 2022.

Section 40-880 deduction

Print at label K Section 40-880 deduction the total of the trust’s deductions allowable under section 40-880 of the ITAA 1997. For more information, see Appendix 6.

For more information on business related costs – section 40-880 deductions, see Guide to depreciating assets 2022.

Landcare operations and deduction for decline in value of water facility, fencing asset and fodder storage asset

Print at label L Landcare operations and deduction for decline in value of water facility, fencing asset and fodder storage asset the deduction available to the trust for landcare operations and for the decline in value of water facilities, fencing assets and fodder storage assets. For more information, see Appendix 6.

51 Small business entity simplified depreciation

Is the trust:

• a small business entity, and
• using the simplified depreciation rules?

No – Go to item. 52 National rental affordability scheme (NRAS) tax offset.

Yes – Read on.

For assets you start to hold, and first use, or have installed ready for use, for a taxable purpose from 7.30pm AEDT on 6 October 2020 to 30 June 2023, the instant asset write-off threshold does not apply to businesses using the simplified depreciation rules. You must immediately deduct the business portion of the asset's cost under temporary full expensing – you do not add these assets to your small business pool.

You must also deduct the total balance of the small business pool at the end of 2021 –22. You cannot opt out of temporary full expensing for assets that the simplified depreciation rules apply to unless you opt out of the simplified depreciation rules.

To complete this item, use the amounts calculated for small business entity depreciation deductions at item 5 Business income and expenses – label K Depreciation expenses.

A small business entity using the simplified depreciation rules must insert 0 at label A Small business entity simplified depreciation because, in 2021–22, you do not hold an asset meeting the criteria to claim instant asset write-off.

You must also complete item 50 Capital Allowances – label S and T to show the amount, and number of depreciating assets, you are claiming a deduction for under temporary full expensing.

Print at label B Deduction for general small business pool the total amount you claim at item 5 Business income and expenses – label K Depreciation expenses relating to the general small business pool. This is the total amount at row b in table 4.

If you have written off the pool balance in a previous year, insert 0 here.

Continue to: Tax offsets – items 52 to 54