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  • Item 3 Status of company

    Attention

    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

    Item 3 Status of company label from Company tax return 2014

    Item 3 requires an entity to select the most appropriate description of its status.

    You need to select one box from C1 to C3 and one box from D1 to D11.

    You may also need to select Z1 or Z2, and one box from E1 to E3.

    Common error: D1 to D11 incorrectly selected

    An incorrect box is selected from D1 to D11.

    Consequence of this error

    Marking an incorrect box may result in your organisation:

    • not receiving a necessary service or material from us
    • paying an incorrect tax rate
    • being inappropriately selected for audit.

    Solutions

    Organisations that are ‘non-profit companies’ should select D3 Non-profit.

    For administrative purposes, non-profit organisations that are ‘other taxable companies’ should select D10 Public.

    See also:

    Consolidation

    If your organisation is a non-profit company and a head company of a consolidated group, you will need to select Z1 Consolidated head company.

    If your organisation is a non-profit company, it cannot be a subsidiary member of a consolidated group or a multiple entry consolidated (MEC) group. You cannot select Z2 Consolidated subsidiary member.

    See also:

    Item 6 Calculation of total profit or loss

    Item 6 Calculation of total profit or loss label from Company tax return 2014

    The Income and Expenses amounts you write at item 6 are accounting system amounts and correspond to the amounts in the financial statements for the income year, except for the depreciation expenses of small business entities using the simplified depreciation rules.

    Common errors: income and expenses incorrectly shown

    Income and expenses from financial statements are often shown incorrectly at item 6. There are two main errors:

    • showing incorrect amounts
    • using incorrect labels.

    Consequence of these errors

    Errors in item 6 could lead to your organisation:

    • paying an incorrect amount of tax
    • being inappropriately selected for audit.

    Solutions

    • Mutual receipts and expenses
      • You must include receipts and expenses that relate to mutual dealings with members at the relevant labels in the item.
      • It is important you include these items at item 6 in order to correctly reconcile the accounting total profit or loss to the taxable income or loss in item 7 Reconciliation to taxable income or loss.
       
    • I Fringe benefit employee contributions
      • Write at I Fringe benefit employee contributions all payments that the entity has received from recipients of fringe benefits.
      • Employee contributions form part of the employer’s or associate’s assessable income if employees make payments for fringe benefits that they have received.
      • Some important points to note about employee contributions are
        • An employee contribution may be made only from an employee’s after-tax income.
        • You cannot use an employee contribution towards a particular fringe benefit to reduce the taxable value of any other fringe benefit.
        • In certain circumstances, journal entries in your accounts can be an employee contribution.
        • An employee contribution paid directly to you (including those received by journal entry) are included in your assessable income (as a general rule, the costs you incur in providing fringe benefits are allowable deductions).
        • An employee contribution paid to a third party who is not an associate (for example, for the servicing of a car) is not assessable to you.
        • When calculating the taxable value of a benefit, you use the full GST-inclusive amount of the contribution to reduce the taxable value of the benefit.
         
       
    • X Depreciation expenses
      • Where an entity uses the simplified depreciation rules, the actual tax deduction for depreciation is included at X.
      • Otherwise, only write the amount of depreciation for accounting purposes.
       

    See also:

    Item 7 Reconciliation to taxable income or loss

    Item 7 Reconciliation to taxable income or loss label from Company tax return 2014

    Item 7 deals with adjustments for tax purposes to reconcile accounting total profit or loss to the taxable income or loss.

    Common errors: amounts incorrectly shown

    Various errors are made in item 7, including:

    • the incorrect use of labels to report revenue and
    • expenses relating to mutual dealings with members.

    Consequence of these errors

    Errors in item 7 could lead to your organisation:

    • paying an incorrect amount of tax
    • being inappropriately selected for audit.

    Solutions

    • W Non-deductible expenses
      • W Non-deductible expenses includes amounts that are expenses for accounting purposes but are not deductible for income tax purposes, including timing variations.
      • Expenses relating to mutual dealings with members are included at W.
      • W excludes any amount included at U Non-deductible exempt income expenditure item 7.
       
    • Depreciation/decline in value
      • Depreciation for accounting purposes is included at W. This is also the amount entered at X Depreciation expenses item 6.
      • Enter the tax-deductible amount of decline in value at F Deduction for decline in value of depreciating assets item 7.
       
    • V Exempt income
      • Write at V all income that is exempt from Australian tax. Do not include at V amounts that are not assessable income and not exempt income.
      • Do not include mutual receipts at V Exempt income. Include these amounts at Q Other income not included in assessable income.
       
    • Q Other income not included in assessable income  
      • Q includes amounts that are income for accounting purposes but not assessable for income tax.
      • Mutual receipts are included at Q.
       

    See also:

    Item 15 Licensed clubs only

    Item 15 Licenced clubs only label from Company tax return 2014

    Only licensed clubs need to complete this label.

    Write the percentage (in whole figures) of total income attributable to non-members at A Percentage of non-member income item 15.

    Common errors: percentage shown incorrectly or item left blank

    There are two main errors:

    • showing an incorrect percentage
    • not writing any percentage.

    Consequence of these errors

    Errors in item 15 could lead to your organisation:

    • paying an incorrect amount of tax
    • being inappropriately selected for audit.

    Solutions

    The percentage of non-member income is the total non-member income divided by the total income, multiplied by 100.

    The percentage entered at this item differs to the percentage calculated by the Waratahs formula where:

    • total income includes non-member income such as bank interest
    • more than one method of apportionment has been used.

    See also:

    Last modified: 10 Feb 2017QC 40743