Steps to making an assessment of a business 043-03060000

Go to the Real Estate/Business Summary (REBS) screen. If the business is already coded and an update is needed, see:

• Business has ceased or has been sold
• Seasonal business activity has ceased completely
• Seasonal downturn in business
• Unexpected downturn of a business
• Irregular or intermittent business activity

Procedure ends here.

Make a decision by weighing up the facts to decide if a customer is self-employed or not.

For more information, see:

• Factors to determine self-employment
• Income and expenses of a business, for hobby income
• Commission sales persons considered as self-employed
• Share traders

For when the:

• customer is advising they are operating a business, go to Step 3
• forms about a business have been submitted, go to Step 4

Obtain appropriate verification documents, which may include the latest available full income tax return and all financial statements for the business.

Sole Trader

See:

• How to identify a sole trader business
• Documents required to assess a sole trader business

Partnership

See:

• How to identify a partnership
• Documents required to assess a partnership

Private company

See:

• How to identify a private company
• Documents needed to assess a private company

Private trust

See:

• How to identify a private trust
• Documents required to assess a private trust

Request the information and allow extra time for mail delivery.

• MOD F: Business details, is to be completed for sole traders, partnerships and farmers
• MOD PC: Private Company, is to be completed for company structures
• MOD PT: Private Trust, is to be completed for trust structures
• MOD R: Real estate details, check to see if real estate is owned by the business

From the module/s and financial statements supplied determine what type of business structure customer is involved in.

For details on:

• sole traders, go to Step 6
• partnerships, go to Step 7
• trusts, go to Step 8
• companies, go to Step 9

• Form I (Individual) is the only tax return completed
• Total net profit from profit/loss statement is declared on customer's personal tax return
• Business income and asset details are included in the Business and Professional items Schedule attached to the person's income tax return
• For more information, see Assessing and coding the Business details for sole traders and partnerships MOD F

See, Step 1 in Table 2.

• Form P (Partnership) income tax return may be completed in addition to Form I (Individual) tax return
• Income is declared at items 'N' and 'O' of question 13 of the person's tax return
• Only a portion of the net profit from the profit/loss statement is declared at question 13 of the customer's Form I tax return
• Business balance sheet refers to 'Partner Capital Account' or 'Partner's Current Account' documents
• Partnership Agreement to be examined for details of the partnership arrangements such as share of income and assets

See, Step 1 in Table 2.

• The claim form or MOD PT - Private Trusts completed by the customer or their representative indicates an involvement in a trust. (As a customer may not be fully aware of their own financial circumstances - don't rely on this alone). For more information, see Assessing and coding the Private Trust details from the MOD PT
• Among the documents provided by the customer or their representative is a trust deed
• The tax return provided is a tax return Form T completed for trusts
• The balance sheet shows 'settled sum' or uses terms like 'beneficiary loan accounts'
• The customer states they hold a bank account or real estate for a family member
• For more information, see Assessment of income from trusts and companies

If the business structure is a trust or company, refer the case to the Complex Assessment Officer (CAO).

Procedure ends here, until the CAO assessment has been completed.

• The name of the structure is suffixed by the word 'Limited' or the abbreviation 'Pty Ltd'
• The claim form or MOD PC - Private Company completed by the customer or their representative, may indicate an involvement in a company structure. (As a customer may not be fully aware of their financial circumstances - do not rely on this alone). For more information, see Assessing and coding the Private Company details from the MOD PC
• Among the documents provided by the customer or their accountant may be a Company Constitution (or Memorandum and Articles of Association)
• The tax return provided by the customer or their representative may be a 'Form C' tax return which is completed for companies
• The balance sheet provided may show 'authorised capital', 'issued and paid up capital' or the terms 'shareholder loan accounts' indicating a company
• For more information, see:
• Assessment of income from trusts and companies
• Home property adjustment amount and apportionment calculations on entity owned residences

If the business structure is a trust or company, refer the case to the Complex Assessment Officer (CAO).

Procedure ends here, until the CAO assessment has been completed.

Identify the customer's role/s in the business. This can be found on the documents supplied. Verify with customer if unsure for example, owner, partner, shareholder, director, beneficiary, salary earner from business.

Other income that may be received from a business structure are commissions, stipends, fees, honoraria, royalties and similar types of remunerative income earned, derived or received by the customer.

Note: a customer could have more than one role in a business and be in receipt of an income source as well as a share of profits from the business.

Ascertain the relevant income and assets test cut off limits for customer and partner, if applicable.

See the appropriate link for income and assets limits:

• Rates and Thresholds
• Pensions income and assets tests
• Allowance income and assets tests
• Income tests for family assistance and Paid Parental Leave scheme payments

Calculate the assessable income applicable to each role the customer undertakes in the business (that is, owner or partner in partnership).

For the date of event (DOV) for assessment of business structures outside a new claim use the correct date of event for business income and assets.

To assess business income, see:

• Assessing sole trader income
• Assessing partnership income

See also:

• Steps to assess an interim profit and loss statement, when annualising income for a new or recently purchased business
• Offsetting profit and losses between businesses
• The profit and loss statement, has the income of the business and the costs incurred in generating this income
• Income tax returns (ITRs) and taxation notice of assessment (NOA)
• Assessing and coding the Business details for sole traders and partnerships MOD F, includes business bank account

Check entitlement under the income test. Combine assessable income from the business with all other assessable income of the customer and partner (if applicable) and compare the relevant cut-off limit.

A Complex Assessment Officer (CAO) will assess the income from a trust or company.

Note: once the details are updated on the customer and partner's records, the system will add up all income values.

For the date of event (DOV) for assessment of business structures outside a new claim use the correct date of event for business income and assets.

For determining the assessable assets from a business structure, see:

• Assessing sole trader assets
• Assessing partnership assets

See also:

• Business assets
• Business liabilities:
• includes assessing business loans
• The balance sheet:
• It lists the assets, liabilities (including loans) and proprietorship of a business at a particular date
• It is part of the financial statements that are often prepared in conjunction with a tax return
• Steps to assess an interim balance sheet:
• It is a point in time snapshot and is generally used with an interim Profit and loss statement
• The depreciation schedule:
• The depreciation of the value of business assets
• Primary production aggregation:
• Primary producers are able to offset the value of all their primary production liabilities against the value of all their primary production assets

Combine the assessable assets from the business for customer and partner (if applicable) with all other assessable assets of the customer and partner. If there is a trust or company, a CAO assessment needs to be completed before this can be done.

If the total asset value is over the cut-off limit, there is no entitlement.

Note: once the details are updated on the customer and partner's records, the system will add up all asset values.

To update details in:

• Process Direct:
• Use Customer Summary to run the Self-employment workflow to add or update details. Select the Self-employment workflow from the Task Selector (START) screen
• Customer Record:
• Go to the Real Estate Business Summary (REBS) screen
• See Assessing and coding the Business details for sole traders and partnerships MOD F for assistance with coding

See Step 9 in Table 2 of Assessing and coding the Business details for sole traders and partnerships MOD F for help with manual coding.