Item 7 Reconciliation to taxable income or loss



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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'Item 7 Reconciliation to taxable income or loss' labels from Company tax return 2010

Item 7 deals with adjustments for tax purposes to reconcile accounting total profit or loss to the taxable income or loss.

Common errors: amounts incorrectly shown

Various errors are made in item 7, including the incorrect use of labels to report revenue and expenses relating to mutual dealings with members.

Consequence of these errors

Errors in item 7 could lead to:

  • you paying an incorrect amount of tax
  • incorrect targeting of audits.


W Non-deductible expenses

WNon-deductible expenses includes amounts that are expenses for accounting purposes but are not deductible for income tax purposes, including timing variations.


Expenses relating to mutual dealings with members are included at W.

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W excludes any amount included at U Non-deductible exempt income expenditure item 7.

Depreciation / decline in value

Depreciation for accounting purposes is included at W. This is also the amount entered at X Depreciation expenses item 6.

Enter the tax-deductible amount of decline in value at F Deduction for decline in value of depreciating assets item 7.

Further Information

For more information on completing these labels, see Guide to depreciating assets 2010 (NAT 1996).

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V Exempt income

Write at V all income that is exempt from Australian tax. Do not include at V amounts that are not assessable income and not exempt income.


Do not include mutual receipts at V Exempt income. Include these amounts at Q Other income not included in assessable income.

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Q Other income not included in assessable income

Q includes amounts that are income for accounting purposes but not assessable for income tax.

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Mutual receipts are included at Q.

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For more information on mutual receipts, see Non-assessable income in our guide Mutuality and taxable income.

    Last modified: 20 Jul 2015QC 23095