Documents required to assess a sole trader business 043-03110020

All necessary financial documents should be requested by Service Officers and forms issued at first contact with a customer. The Service Officer should explain why these documents are required.

The following documents may be required:

Business Details (MOD F)

• MOD F is a Services Australia form to be completed by the customer, which:
• enables identification of the type of business the customer is involved in
• assists in determining eligibility for activity tested payments and payments with mutual obligation requirements
• advises whether the business is continuing to operate

Real Estate Details (MOD R) and local council rates notice for each property owned by the sole trader

• MOD R is a Services Australia form which asks questions relating to the type, ownership and value of real estate assets. The rates notice has the relevant details of the property identification, for example, Lot and DP numbers required for a valuation. Note: if the property is larger than 2 hectares a rural property questionnaire needs to be completed for additional information
• The MOD R is required to:
• gather information necessary for the assessment of the value of a property
• show if any income is derived from the property (that is, is it rented)
• Profit and loss statement
• Balance sheet
• Depreciation schedule
• Livestock Trading Account
• Income tax returns (ITRs) and the taxation notice of assessment (NOA)

Documents in respect to mortgages and loans

• Documentation verifying mortgages and loans may be required to confirm the liabilities of the sole trader. These documents should show what security is provided for business loans and allows assessment of what liabilities can be deducted from the assets of the business when calculating the value of the business.

Any Notes to the Accounts

• Any Notes to the Accounts, if prepared, or any other financial statements prepared need to be provided. These are used to add extra information or to explain a particular item on the financial statements. The additional information provided will give a better understanding of the business and will assist in the asset and income determination of the sole trader

Not all documents are required in all cases, for example:

• If a customer advises of the commencement of a business, it is important to take into account the nature of the business and the likely impact under the Income and Assets Tests
• A balance sheet is not always prepared by accountants for small business enterprises conducted by a sole trader. Some factors to take into account are:
• If a customer advises they have a small service type enterprise (for example, gardening, cleaning, home maintenance) conducted as a sole trader, they may not prepare a balance sheet
• Where no balance sheet is prepared, the customer should provide a list of the type and value of the assets and the type and balance of the liabilities of the business
• The customer should also be advised to notify immediately if the financial position of the business changes
• Not all businesses, particularly those conducting a service type enterprise, will claim a depreciation expense. A depreciation schedule will not be prepared unless depreciation is claimed as an expense
• Not all businesses will prepare a separate profit and loss statement, it may be incorporated into the customer's personal income tax return on the Business and Professional Items Schedule

If the customer has a rural property, Service Officer should issue a Rural property questionnaire (Q454) letter for completion.

Assessments of sole trader businesses are done by a Service Officer in a service centre or referred to a Complex Assessment Officer (CAO).