Preparing the BPI schedule
Business and professional items instructions will help you to prepare the Business and professional items schedule 2025.
In these instructions, we provide information about:
- streamlined provisions for small business entities
- personal services income (PSI)
- business income you must show on the schedule
- deductions you may be able to claim.
Who are these instructions for?
Use these instructions if you're an individual who needs to complete questions 14, 15 or 16 in your supplementary tax return. You may also need to use these instructions if you have a net loss from a business activity carried on in partnership with others (question 13 in the supplementary tax return).
If you don't complete the business or professional items that apply to you, your tax return may be rejected as incomplete. We consider a tax return lodgment complete when we receive it with all relevant questions and labels complete.
We may apply a penalty if you lodge your tax return and schedule late, see Failure to lodge on time penalty.
If you have a net loss from a business activity carried on in partnership with others, you may need to complete P3 Number of business activities and P9 Business loss activity details of the Business and professional items schedule 2025. See Question 13 in Supplementary tax return instructions 2025. Don't include your partnership details at any other question in your schedule.
You'll also need to complete the Individual PAYG payment summary schedule and instructions if you receive any of the following:
- PAYG payment summary – business and personal services income
- PAYG payment summary – withholding where ABN not quoted
- PAYG payment summary – foreign employment
These instructions will also help you fill in the Individual PAYG payment summary schedule.
How long did it take you to complete this schedule?
We are committed to reducing the costs involved in complying with your tax obligations. Your response to this item will help us monitor these costs.
Write the number of hours it takes you to prepare and complete your Business and professional items schedule for individuals 2025 at label S in your schedule.
When completing this label consider the time (rounded up to the nearest hour) you spent:
- reading the instructions
- collecting information
- making 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. Include the time spent by your tax agent and any other person who assists you.
If you're a tax agent preparing this schedule on behalf of your client, include your time and a reliable estimate of their time.
Records for BPI schedule items
You must keep records of most transactions in English for 5 years after you prepare or obtain them, or 5 years after you complete 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.
If you have losses, you should generally keep records until the later of either:
- 2 years from the income year when you fully deduct a tax loss
- 5 years.
If you apply a net capital loss, you should generally keep your records of the capital gains tax (CGT) event that resulted in the loss until the end of any period of review for the income year in which the capital loss is fully applied. Penalties can apply if you don't keep the records for the period required.
Some of the more significant record-keeping problems we have identified are failure to:
- record cash income and expenditure
- account for personal drawings
- record goods taken for your own use
- separate private expenses from business expenses
- keep valid tax invoices for creditable acquisitions when registered for the goods and services tax (GST)
- keep adequate stock records
- keep adequate records to substantiate motor vehicle claims.
For more information, see Taxation Determination TD 2007/2 Income tax: should a taxpayer who has incurred a tax loss or made a net capital loss for an income year retain records relevant to the ascertainment of that loss only for the record retention period prescribed under income tax law?
Choice of superannuation fund
You must keep records that show you have met your obligations to offer a choice of superannuation fund.
Hobby or business
It is important to determine whether you're carrying on a business or pursuing a hobby, sport or recreational activity that doesn't produce income.
In general, you're considered to carry on a business if the activity:
- has started
- 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
- is planned, organised and carried on in a business-like manner
- is of a sufficient size, scale and permanency to generate a profit
- can't be more accurately described as a hobby, recreation or sporting activity.
For more information, see Taxation Ruling TR 97/11 Income tax: am I carrying on a business of primary production?
Assets put to a tax-preferred use – Division 250
Division 250 of the Income Tax Assessment Act 1997 (ITAA 1997) applies to the leasing of assets and other similar arrangements to tax-preferred end users (such as tax-exempt entities, non-residents, and permanent establishments of Australian residents) that carry on business in a foreign country.
If Division 250 applies to an arrangement, then capital allowance deductions will be denied or reduced for the asset and the arrangement is treated as a deemed loan that is taxed as a financial arrangement on a compounding accruals basis.
Division 250 applies to all relevant arrangements where the tax-preferred use of an asset started on or after 1 July 2007. However, Division 250 doesn't apply if the use occurs under a legally enforceable arrangement that was entered into before 1 July 2007.
Division 250 doesn't apply if both:
- you're a small business entity for the income year in which the arrangement period for the tax-preferred use of the asset starts
- you choose to deduct amounts under Subdivision 328-D (capital allowances for small business entities) for the asset for that income year.
Division 250 doesn't apply to certain short-term and low-value arrangements.
Concessions for small business entities
Do you carry on a business at any time during 2024–25 and have an aggregated turnover of less than $10 million?
- No – Go to P1 Personal services income (PSI).
- Yes – Read on.
You need to know
You're a small business entity if you're carrying on a business and have an aggregated turnover of less than $10 million. If you're a small business entity, you may qualify for a range of tax concessions. .
Eligible businesses can choose to use the concessions that best suit their needs. It isn't necessary to elect to be a small business entity each year in order to access the concessions, however businesses must review their eligibility each year.
A small business entity needs to have an aggregated turnover of less than $2 million to be eligible for the following concessions:
- CGT 15-year asset exemption
- CGT 50% active asset reduction
- CGT retirement exemption
- CGT small business rollover
A small business entity needs to have an aggregated turnover of less than $5 million to be eligible for the small business income tax offset – equivalent to 16% of the income tax payable on your net small business income (capped at $1,000).
A small business entity needs to have an aggregated turnover of less than $10 million to be eligible for the following concessions:
- small business restructure roll-over
- simplified depreciation rules
- accounting for GST on a cash basis
- annual apportionment of GST input tax credits
- paying GST by instalments
A business entity needs to have an aggregated turnover of less than $50 million to be eligible for the following concessions:
- simplified trading stock rules
- deducting certain prepaid business expenses immediately
- deducting certain business start-up expenses immediately
- fringe benefits tax car-parking exemption
- fringe benefits tax certain work-related items exemption
- pay as you go (PAYG) instalments based on gross domestic product adjusted notional tax.
For more information, see Small business CGT concessions.
Aggregated turnover
Aggregated turnover is your annual turnover plus the annual turnover of any entities that are connected with you or that are your affiliates (adjusted to ignore dealings between connected entities and affiliates). Using aggregated turnover prevents larger businesses from structuring or restructuring their affairs to take advantage of the small business entity concessions.
You must review your eligibility each year.
Calculating your turnover
Turnover includes all ordinary income you earn in the ordinary course of business for 2024–25. The following are some examples of amounts to include and exclude in ordinary income of a business:
Include these amounts:
- sales of trading stock
- fees for services you provide
- interest from business bank accounts
- amounts you receive to replace something that would have had the character of business income.
Exclude these amounts:
- GST charged on a transaction
- proceeds from the sale of business assets
- capital gains
- insurance proceeds for the loss or destruction of a business asset
- amounts you receive from repayments of farm management deposits.
There are special rules for calculating your annual turnover if you have retail fuel sales or business dealings with associates.
The business operated for only part of the year
If you only carry on a business for part of 2024–25, work out your annual turnover using a reasonable estimate of what the turnover would be if you were carrying on the business for the whole of 2024–25. This includes winding up the business.
Satisfying the aggregated turnover threshold
Your business satisfies the small business entity aggregated turnover requirement if you meet one of the following:
- your aggregated turnover for 2023–24 is less than $10 million
- you estimate at the beginning of 2024–25 that your aggregated turnover for the year will be less than $10 million (and your aggregated turnover in 2022–23 or 2023–24 was less than $10 million)
- your actual aggregated turnover, worked out at the end of 2024–25, is less than $10 million. You rely on this test only if you don't satisfy either of the 2 tests above. If you satisfy this test only, you can't use the GST and PAYG instalments concessions for 2024–25.
For more information, see Small business entity concessions.
Former simplified tax system (STS) taxpayers
If you're using the simplified tax system, find out about:
Continued use of the STS accounting method
Although the STS has now ceased, you may continue using the STS accounting method for 2024–25 if all of the following apply:
- you were an STS taxpayer continuously from the income year that started before 1 July 2005 (that is from 2004–05) until the end of 2006–07
- you used the STS accounting method from 2005–06 to 2022–23
- you're a small business entity for 2024–25.
If you meet these 3 requirements, you can continue using the STS accounting method until you choose not to or you're no longer a small business entity. If you continue to use the STS accounting method, you base the amounts you include at P8 Business income and expenses on the STS accounting method. If your accounting system or financial statements don't reflect the STS accounting method, you may need to make additional reconciliation adjustments at P8 Reconciliation items.
The STS accounting method doesn't apply to income or deductions that receive specific treatment under income tax law, for example, net capital gains, dividends, depreciation expenses, bad debts and borrowing expenses.
A timing rule will override the received or paid rule under the STS accounting method, where either:
- an amount of ordinary income is apportioned or altered under another provision
- an amount of a general deduction is apportioned or altered under another provision.
For example, double wool clips or prepayment of a business expense for a period greater than 12 months. Because of these specific provisions, you may need to make adjustments at P8 Reconciliation items.
Ceasing use of the STS accounting method
If you have discontinued using the STS accounting method, or you're no longer a small business entity, accounting adjustments may need to be considered. As Business income and expenses will not have been accounted for (because they haven't been received or paid) they will need to be accounted for in this income year. You may need to make additional reconciliation adjustments at P8 Reconciliation items.
There is also a special rule that applies if you're winding up a business this year that you previously carried on, and you were an STS taxpayer in the income year you ceased business.
For more information, see Small business entity concessions.
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