Accounting principles
Accounting principles has the meaning given by subsection 995–1(1).
Financial statements
Financial statements are the documents that represent the financial position and financial performance of an entity, prepared in accordance with accounting principles. They include financial reports prepared pursuant to Chapter 2M of the Corporations Act 2001.
If there are one or more sets of financial statements relevant for an entity, the financial statements that apply are those that recognise or disclose the uncertainty about taxes payable or recoverable to which the position relates.
For guidance on what is considered a financial statement see Guidance on providing general purpose financial statements.
Hybrid mismatch rules
Hybrid mismatch rules collectively refer to Division 832 and amendments to:
- Subdivision 768–A
- section 23AH of the Income Tax Assessment Act 1936 (ITAA 1936)
- Part IIIB of the ITAA 1936.
Loan amount
For loans or borrowings, trade financing and other types of debt interests under Division 974 of the ITAA 1997, the average balance of the loan, borrowing or other debt interest during the income year is calculated the same way as quarterly balances of borrowings and loans shown at Question 11a of the International dealings schedule 2026.
Majority controlling interest
An entity holds a majority controlling interest in another entity where it holds more than 50% of the voting power at a general meeting of that entity.
Materiality amount
An entity's materiality amount is 5% of its Australian current tax expense, except where:
- 5% of its Australian current tax expense exceeds A$30 million – the materiality amount is then A$30 million
- 5% of its Australian current tax expense is less than A$3 million – the materiality amount is then A$3 million
- it has no Australian current tax expense – the materiality amount is then A$3 million.
You must calculate your entity's Australian current tax expense in accordance with accounting principles.
Use A$3 million as the materiality amount if:
- your entity doesn't calculate its Australian current tax expense and doing so requires significant additional effort
- you consider the materiality amount for RTP purposes isn't appropriate to your entity's circumstances.
International related parties
International related parties are persons:
- not dealing wholly independently with one another in their commercial or financial relations, and
- whose dealings or relations can be subject to Subdivision 815–B of the ITAA 1997 or the associated enterprises article of a relevant double tax agreement (DTA).
The term includes:
- any overseas entity or person who participates directly or indirectly in your management, control or capital
- any overseas entity or person in respect of which your entity participates directly or indirectly in the management, control or capital
- any overseas entity or person in respect of which persons who participate directly or indirectly in its management, control or capital are the same persons who participate directly or indirectly in your management, control or capital.
Position
A position is the effect, for taxation purposes, given to particular arrangements or transactions, as reflected in the statements made in your entity's Fund tax return 2026.
This includes positions:
- due to interpretative matters – for example, legislative construction
- due to findings of fact – for example, market valuations
- where the effect for tax purposes is an omission from your entity's tax return.
Potential adjustment
Potential adjustment means the total of the following amounts in the 2025–26 income year should the RTP not be sustained:
- your entity's tax rate multiplied by an amount, or part of an amount, that would be included in its assessable income
- your entity's tax rate multiplied by a deduction, or a part of a deduction, that wouldn't be allowable to your entity
- your entity's tax rate multiplied by a capital loss, or a part of that capital loss, that wouldn't be incurred by your entity
- a foreign income tax offset that wouldn't be allowable to your entity
- a tax offset that wouldn't be allowable to your entity.
Your entity's tax rate is the applicable tax rate specified in the Income Tax Rates Act 1986.
Total fund income
Total fund income is the amount reported in the gross income label of the fund tax return. For 2026, gross income is reported at label 10W.
Continue to: Section A: Taxpayer details – Super funds.
Return to: Guide to understanding reportable tax positions – Super funds.