Steps to assess an interim profit and loss statement 043-03080040
This document outlines the steps to assess interim profit and loss statements for customers involved in a business.
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Issue or request a profit and loss statement
Reviewing and assessing an interim profit and loss statement
Issue or request a profit and loss statement
Table 1
Step |
Action |
1 |
When an interim profit and loss statement is required + Read more ... There are situations where assessable income for a business cannot be determined by the prior year's income tax return. For example, where a customer:
Services Australia cannot use a Business Activity Statement (BAS) to verify changes in business income. The BAS does not contain information about expenses. A customer can provide an interim profit and loss statement or complete a Profit and Loss Statement (SU580). Has the customer provided an interim profit and loss statement?
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2 |
Issue required business modules + Read more ... Where the customer is providing advice of business involvement for the first time, additional forms may be required. Confirm the type of business structure utilised to undertake the business activity. For example:
Note: for involvement in a private trust or private company, a Complex Assessment Officer (CAO) is required to undertake the assessment of the business. See Identifying and making suitable referrals to the Complex Assessment Officer (CAO). Check the following forms have been completed and returned, where necessary:
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3 |
Issue a profit and loss statement + Read more ... Where required, issue a Profit and Loss Statement (SU580) to the customer to complete and return. See Requesting information (CLK). Note: for private trust and private company businesses, customers are encouraged to provide their own profit and loss statement as the SU580 is not suitable. Only a Complex Assessment Officer (CAO) is permitted to undertake the assessment of a private trust or private company. See Identifying and making suitable referrals to the Complex Assessment Officer (CAO). The interim profit and loss statement should cover an appropriate period that represents the current rate of net business income. The period could be, but is not restricted to:
The customer will need to continue to supply a new interim profit and loss statement at the following:
Each updated profit and loss statement must cover the full accumulative period from the initial date of self-employment or change in income. For example, if the business commenced on 1 April, the:
Note: if the customer provides a subsequent profit and loss statement which is not accumulative, an amended profit and loss statement will need to be provided before an accurate assessment can take place. Tell the customer to provide the annual business income tax return, financial statements and personal (and partner's) tax return when prepared. Has the customer returned all the required documents?
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Reviewing and assessing an interim profit and loss statement
Table 2
Step |
Action |
1 |
Review profit and loss statement + Read more ... Check the expenses claimed on the profit and loss statement for any non-allowable deductions and one-off income or expenses. Remove the amount of any non-assessable income and non-allowable deductions from the profit and loss statement. See Business deductions for determining allowable expenses. Expenses for salary, wages or commissions
Financial investments
COVID-19 stimulus income
If the income and expenses listed on the profit and loss statement provided by a customer do not appear reasonable:
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2 |
Apportion expenses + Read more ... Apportion relevant expenses from the profit and loss statement so that the amount claimed as a deduction matches the period of income earned by the business covered in the interim profit and loss statement. For example, if vehicle is used 100% for the business, and the profit and loss statement covers a 3-month period (a quarter), then 25% of the annual registration fee could be claimed as a deduction. |
3 |
Annualise adjusted net profit or loss + Read more ... The adjusted net profit/loss for the period reflected on the profit and loss statement must be annualised. To ensure the correct assessment is made use the interim profit and loss calculator for the business type, see Resources page for calculator. When inputting dates in the profit and loss calculator, dates must be entered in the following format dd/mm/yyyy. Examples, for:
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4 |
Recording the annual net profit or loss + Read more ... Once an annual net profit or loss is determined, this amount can then be recorded for the business. Note: the net income from the profit and loss statement period is used to determine the new ongoing rate of income only and must not be used to amend the period to which the interim profit and loss statement relates. The exception to this, is when there has been a notifiable event. For example, recording the new business for the first time For assistance with:
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5 |
Setting a review A review is required to be set for when a subsequent profit and loss statement is required. Private trust and private company businesses + Read more ...
Sole trader and partnership businesses + Read more ... In Customer First, create a manual review to request documents on the Review Registration (RVR) screen and complete the fields as follows:
The review will mature on the Due Date coded in the RVR activity. Workload Management will allocate the review for manual action. Additional considerations + Read more ... At each contact with the customer:
Tell the customer to provide the following when prepared:
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6 |
Document details of the assessment + Read more ... Complete a Note/DOC on the customer/entity record with details about the assessment. Make sure the following information is included:
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