Introduction

This schedule is to be used only by individuals

If you complete item 13, 14 or 15 of your tax return (supplementary section), you must fill in the 2004 business and professional items schedule for individuals (PDF 276KB)This link will download a file NAT 2816–04 send it in with your tax return. If the business or professional items that apply to you are not filled in, your tax return will be sent back to you. These instructions will help you to fill in the schedule.

If your tax return and completed schedule are lodged late, you may be liable for a penalty. For information on the penalty for failure to lodge on time, see page 8 in TaxPack 2004.

If you have a net loss from a business activity carried on in partnership with others, you may need to complete items P3 and P9 of the schedule. Refer to the instructions for item 12 of your tax return (supplementary section). Do not include your partnership details at any other item on your schedule.

You will also need to complete the Individual PAYG payment summary schedule 2004 (PDF 171KB)This link will download a file NAT 3647-04 if you received any of the following:

• Payment summary – withholding where ABN not quoted NAT 3282
• Payment summary – voluntary agreement (PDF 52KB)This link will download a file NAT 2772
• Payment summary – labour hire and other specified payments (PDF 83KB)This link will download a file NAT 3282

These instructions will help you fill in that schedule.

How many hours did it take you to prepare and complete this schedule?

The Tax Office is committed to reducing the costs involved in complying with your tax obligations. Your response to this item will help us monitor these costs as closely as possible.

Write the number of hours it took you to prepare and complete your 2004 business and professional items schedule for individuals (PDF 276KB)This link will download a file NAT 2816–04 at S in the Taxpayer's signature block on your schedule.

When completing this item consider the time, rounded up to the nearest hour, you spent:

• reading the instructions
• collecting the necessary information to complete this schedule
• making any necessary calculations
• completing the schedule
• putting the tax affairs of your business in order so the information can be handed to your tax agent.

Your answer should reflect the time your business spent preparing and completing your schedule and the time spent by your tax agent and any other person whose assistance you obtained.

If you are a tax agent preparing this schedule on behalf of your client, include your time and a reliable estimate of their time.

You need to know

Records you need to keep

You must keep records of most transactions in English for five years after you prepared or obtained them, or five years after you completed the transactions or acts to which they relate, whichever is the later. Taxation Ruling TR 96/7 Income tax: record keeping – section 262A – general principles clarifies the record keeping obligations of small businesses, particularly for cash transactions. In addition, Taxation Ruling TR 97/21 Income tax: record keeping – electronic records provides further information on electronic records.

The Tax Office is helping small business operators meet their record-keeping obligations by reviewing their record-keeping practices. These reviews start with a telephone call or a brief visit to the business premises. The process is explained, you can ask questions and an interview is arranged for a later date.

Some of the more significant record-keeping problems identified by the Tax Office are failure to:

• record cash income and expenditure
• account for personal drawings
• record goods for your own use
• separate private expenses from business expenses
• keep valid tax invoices for creditable acquisitions when registered for GST
• keep adequate stock records
• keep adequate records to substantiate motor vehicle claims.

For additional information, please refer to the publication Record keeping for small business, (NAT 3029).

To get a copy of the electronic record-keeping package e-Record CD-ROM, phone 1300 139 051.

Hobby or business?

It is important to determine whether you are carrying on a business or pursuing a hobby, sport or recreational activity that does not produce income.

In general, you are considered to have a business if the activity:

• has actually commenced
• has a significant commercial purpose or character
• has a purpose of profit as well as a prospect of profit
• is carried out in a manner that is characteristic of the industry
• is repeated, regular or continuous

cannot be more accurately described as a hobby, recreation or sporting activity.

For additional information, see Starting your own business, Primary producers should also refer to Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production?