Not-for-profit guide to company tax return 2015

Example – case study 2

Warning:

This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

End of attention

This example uses information provided in Case study 2 in Mutuality and taxable income. Refer to Case study 2 for information to help you understand this example, such as the Celadon Club's financial statements and the calculation of its taxable income.

The Celadon Club has determined its taxable income for the year ended 30 June and is ready to complete its 2015 company tax return.

For guidance in completing its tax return, the club uses:

this guide
the Company tax return instructions 2015.

The following are extracts of the labels on the club’s completed return.

Relevant period

Example using 'Relevant period' label

The club leaves this item blank, as the dates will default as 1 July 2014 to 30 June 2015.

Item 2 Description of main business activity

Example using 'Item 2 Description of main business activity' label

The club’s main activity is providing licensed facilities to its members and the general public. It enters ‘Licensed club’ in the ‘Description of main business activity’ item and ‘45301’ at B Industry code.

Item 3 Status of company

Example using 'Item 3 Status of company' label

The club is resident in Australia and is a non-profit company. It selects C1 and D3.

The club does not select any boxes from E1 to Z2 as none of them apply.

Item 6 Calculation of total profit or loss

Example using 'Item 6 Calculation of total profit or loss' label

Item 6 amounts are from the following calculations. The club uses the revenue and expense items from its financial statements (to see their financial statements, refer to Case study 2 in Mutuality and taxable income).

T Total profit or loss equals the club’s net profit in its financial statements.

Income
Label	Revenue item	$
C	Bar sales	827,695
C	Bingo and raffle income	23,496
C	Club luncheons – ticket sales	22,500
C	Poker machine revenue	1,598,247
		2,471,938
F	Interest received	54,322
G	Function room hire	6,000
G	Lease income – restaurant	10,000
		16,000
R	Total of other revenue amounts	137,840
S	Total	2,680,100

Note: C Other sales of goods and services includes gross sales of trading stock and gross earnings from services. After filling in relevant specific labels, any remaining gross revenue (such as membership subscriptions) is included at R Other gross income.

Expenses
Label	Expense item	$
A	Bar expenses – cost of goods sold	392,576
A	Bingo expenses	4,533
A	Club luncheons – catering	13,500
A	Club luncheons – entertainment	3,000
A	Raffle expenses	24,851
A	Central monitoring service charges	26,183
		464,643
D	Superannuation	66,499
X	Bar – decline in value	13,592
X	Decline in value (depreciating assets)	121,498
X	Gaming – decline in value	262,481
		397,571
Z	Bar – maintenance and supplies	29,764
Z	Gaming – repairs and maintenance	36,438
Z	Repairs and maintenance	86,563
		152,765
S	Total of other expense amounts	1,320,429
Q	Total	2,401,907

Note: X Depreciation expenses includes depreciation amounts for accounting purposes because the club is not using the simplified depreciation rules. After filling in relevant specific labels, any remaining expenditure (such as subscription expenses) is included at S All other expenses.

Item 7 Reconciliation to taxable income or loss

Example using 'Item 7 Reconciliation to taxable income or loss' label

Item 7 amounts are from the following calculations. The club uses worksheet 2 in the Company tax return instructions 2015 for W Non-deductible expenses and Q Other income not included in assessable income.

T Taxable income or loss equals the club's taxable income in Case study 2 in Mutuality and taxable income.

Label	Classification item	$
W	Depreciation expenses – X item 6	397,571
W	Expenses incurred in deriving non-assessable non-exempt income:
	members magazine	8,000
	membership cards	2,000
	subscription expenses	9,226
	other non-deductible expenses less non-deductible decline in value expenses (see note a)	1,352,186
		1,768,983
F	Deduction for decline in value of depreciating assets (see note b)	111,479
Q	Other income amounts in the accounts that are not assessable income:
	member subscriptions	51,800
	other non-assessable revenue (see note c)	1,780,616
		1,832,416

Notes:
The following figures are taken from 'STEP 3: Separate the apportionable items' in Case study 2 in Mutuality and taxable income:

a Total non-deductible expenses less total non-deductible decline in value (depreciating assets)

= $1,638,278 – ($9,781 + $87,430 + $188,881)
= $1,352,186

b Total deductible decline in value (depreciating assets)

= $3,811 + $34,068 + $73,600
= $111,479

c Total non-assessable revenue = $1,780,616.

Item 15 Licensed clubs only

Example using ‘Item 15 Licensed clubs only’ label

As the Celadon Club is a licensed club, it calculates the percentage of its non-member income as follows:

Percentage of non-member income equals total non-member income divided by total income multiplied by 100. In this example $847,684 divided by $2,680,100 multiplied by 100 equals 31.6288%

Note: Total non-member income = Assessable income from 'STEP 4: Calculate the taxable income' in Case study 2 in Mutuality and taxable income.

The club rounds the percentage to whole figures and writes 32% at A.

The percentage of non-member income entered at this item differs from the club's non-member percentages calculated in Case study 2 of Mutuality and taxable income. This is because:

the club used more than one method of apportionment – that is, a simple method and the Waratahs formula
the club's total income includes non-member income such as bank interest.

Last modified: 10 Feb 2017QC 46393