ATO Interpretative Decision
ATO ID 2002/511 (Withdrawn)
Income Tax
Substituted Accounting PeriodFOI status: may be released
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This ATO ID is withdrawn because the current ATO position is contained in PS LA 2007/21.This document incorporates revisions made since original publication. View its history and amending notices, if applicable.
This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Whether a non-profit club which operates and is audited on a calender year basis is entitled to adopt a substituted accounting period.
Decision
The organisation is not entitled to adopt a substituted accounting period as it has no substantial business need to adopt such an accounting period.
Facts
A non-profit club operates on a calender year basis and is audited on a calender year basis. For convenience, the club wishes to adopt a substituted accounting period as the need to prepare income returns on a financial year basis imposes further costs on the organisation which has limited resources. The organisation commences to lodge income tax returns on a calender year basis without previously having requested approval to adopt a substituted accounting period prior to lodging the returns.
Reasons For Decision
Section 17 of the Income Tax Assessment Act 1936 requires income tax be paid for financial years which commence on 1 July and for each succeeding financial year. Section 18 of the Income Tax Assessment Act 1936 allows the Commissioner to grant leave to adopt an accounting period being the 12 months ending on some date other than 30 June.
Taxation Ruling IT 2360 discusses the circumstances and considerations that will be taken into account by the Commissioner in deciding whether to grant leave to an organisation to adopt a substituted accounting period. The Ruling states that:
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- a change in accounting period will only be approved where there is a substantial business need for making the change;
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- convenience of the taxpayer is not sufficient reason for changing accounting period;
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- in the normal course of events it would be expected that an application would be made in the first year in which the reasons for seeking leave manifest themselves; and
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- the lodgement of a return for a period ending on some date other than 30 June is not acceptable as an application for leave under subsection 18(1) of the Income Tax Assessment Act 1936.
The club has no substantial business need to adopt a substituted accounting period. No factors which could be considered peculiar to the particular business or class of business makes a 30 June year wholly inappropriate or impractical as a measure for determining the club's taxable income (Taxation Ruling IT 2360).
Date of decision: 27 May 1998Year of income: 1998
Legislative References:
Income Tax Assessment Act 1936
Section 17
Section 18
Related Public Rulings (including Determinations)
Taxation Ruling IT 2360
Other References:
Previously Released as CDS10106
Keywords
Substituted Accounting Period
ISSN: 1445-2782
| Date: | Version: | |
| 27 May 1998 | Original statement | |
| You are here | 8 October 2010 | Archived |