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P8 Business income and expenses

Last updated 28 April 2003

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
  • 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
  • other business income.

Except for the values of opening and closing stock-which are to be shown at tax values -the amounts to be included in the Income and expenses sections of item P8 are amounts derived from your accounting system or financial statements. They should form part of your profit and loss statement, and the basis for calculating your net profit or loss. Any adjustments to these amounts for tax purposes should be dealt with in the Reconciliation items section of item P8.

If you are registered for GST, income and expense amounts should exclude GST.

Stop: Do not show the following types of income at item P8:

  • gross interest-show the amount of income at item 10 on your tax return
  • dividends and imputation credits-show the amounts at item 11 on your tax return
  • distributions from partnerships and trusts-show these at item 12 on your tax return
  • gross rental or similar income, such as adjustment or hire fees-show the amount at item 20 on your tax return
  • net capital gains-show the amount at item 17 on your tax return
  • personal services income shown at P1
  • farm management withdrawals-show the amount at item 16 on your tax return
  • attributed foreign income-show the amount at item 18 on your tax return
  • foreign source income-show the amount at item 19 on your tax return.

If you received personal services income as a sole trader, you must complete item P1 of the 2001 business and professional items schedule. Personal services income is income that is mainly a reward for an individual's personal efforts or skills. Where you have net personal services income at M item P1, do not include the personal services income or claim deductions relating to that income at item P8.

Did you have amounts withheld from your business income other than personal services income included at item P1?

No-Go to part B.

Yes-Read on.

If tax has been withheld from business income you should have received a payment summary.

If you received any of these payment summaries:

  • Payment summary-withholding where ABN not quoted
  • Payment summary-voluntary agreement
  • Payment summary-labour hire and other specified payments

you will need to complete the Individual PAYG payment summary schedule 2001 before completing item P8.

A payer may issue a receipt, remittance or similar document in place of the ATO's Payment summary-withholding where ABN not quoted.

If you received a payment from which tax was withheld and you did not receive or have lost your payment summary, contact the payer and ask for a copy.

How to complete the Individual PAYG payment summary schedule 2001

Step 1

Write your TFN and name in the appropriate boxes at the top of the schedule.

Step 2

Nature of income-Print X in the Business income box.

Note: Where you have both business income (item P8) and personal services income (item P1) you will need to complete 2 separate individual PAYG payment summary schedules.

Step 3

For each payment summary transfer the following information onto the schedule:

  • 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
  • the payer's ABN or WPN and the payer's name in the appropriate boxes
  • the total tax withheld at the Tax withheld box
  • the gross payments in the Gross payment box.

Step 4

Check that you have recorded details from all relevant payment summaries on your Individual PAYG payment summary schedule 2001 and attached the schedule to page 3 of your tax return.

Do not attach the payment summaries to your tax return. You are required to keep them for a period of 5 years.

Payers are required to report to the ATO details of payments where amounts of tax have been withheld. This information will be cross-checked with your tax return to ensure that you have declared the correct amount of income and the correct amount of tax withheld.