Documents needed to assess a private company 043-04010020

A customer may be unable to provide the documents requested for various reasons.

If a customer is unable to provide the documents requested on the Module PC - Private Company form (MOD PC), firstly check the entity details on the Trust/Company Miscellaneous Details (TRMD) screen, in Environment A, to see if Services Australia already has the documents required. If the required information has not yet been provided, the MOD PC gives details of the person to contact for further information regarding the company.

Original documents are required

The MOD PC is used to:

• ensure correct identification of this company
• determine the extent of the customer's involvement in this company
• determine any concessions that are applicable to the assessment of the customer's entitlement to income support
• establish if any property valuations are required by a qualified professional valuer
• calculate the income and assets of this company to be attributed to the customer

Original documents are required

For information on the assessment of trusts, refer to:

• Trusts
• Trusts pre 1 January 2002

Original documents are required

Real estate held by the company will be listed on its balance sheet. However, the balance sheet often records assets at historical cost value rather than at current market value.

The real estate details section of the MOD PC asks for information to accurately identify the property in case a valuation is required, and asks for the customer's estimate of the current market value to determine if a valuation is required.

Original documents are required

Written agreements concerning loans are used to determine if these liabilities can be recognised.

When determining if a loan is to be recognised as a liability of the company, Services Australia is looking for the loan agreement to contain the following:

• the purpose of the loan
• details of any security offered for the loan, for example, the address of real estate
• the terms of the loan, for example, interest rate, repayment schedule, period of the loan
• the name and signature of an independent third party acting as witness
• the date of the agreement
• the words 'signed, sealed and delivered'

Even if the loan agreement provided by the customer does not contain all of the above information, a copy should be retained by Services Australia for future reference. For example, it may be used if a customer requests a review of a determination.

Only copies are required

The personal income tax return is the form lodged with the Australian Taxation Office (ATO). It declares the taxable income of the customer and their partner and lists the expenses they have claimed as being deductible against their income. Note: some deductions are not allowable under social security law.

Individual Tax Returns (ITR) can also help identify the type of business in which the customer or their partner are involved.

The ITR differs from the Notice of Assessment (NOA) in that it includes descriptions of all the sources of the customer's/partner's income and deductions/expenses - the NOA is issued by the ATO after the tax return has been assessed.

For more information, see Income tax returns (ITRs) and the taxation notice of assessment (NOA).

Only copies are required

The company income tax return is the form lodged with the Australian Taxation Office (ATO) which declares the taxable income of a company and lists the expenses it has claimed as being deductible against its income. This tax return:

• identifies customers involved in the company and what their rights and interests are
• identifies who is in control of the company
• provides details of company income and assets
• identifies who to contact about the company (for example, the customer's accountant), whether the company is continuing to operate and other information relevant to their assessment

Tax returns are not required to be lodged by companies if no income producing activities were conducted in the financial year. Therefore, the latest tax return for the company will need to be obtained.

The latest available tax return can be used as an indication of the financial position of the company at that time and the financial statement can be updated to reflect information provided by the customer regarding the activities of the company since the latest tax return was completed.

For more information, see Income tax returns (ITRs) and the taxation notice of assessment (NOA).

Only copies are required

This document shows the gross profit after taking into account the cost of the purchase of the stock that has been sold. Sometimes the trading account details are included on the same page as the profit and loss statement.

It can be used to determine if a valuation is required for stock.

It provides details of the number and type of livestock held by a company but may list the value of this asset at an average cost.

For more information, see Livestock trading account.

Only copies are required

The profit and loss statement itemises the amount of each type of income derived by the company from all sources and the type and amount of each expense claimed by the company for a period of time.

It is necessary to establish the total value of all business income in order to calculate the value of the customer's share of or interest in the income.

It is necessary to establish the type, nature and value of all business expenses deducted from business revenue as not all expenses are allowable deductions from income under the Social Security Act 1991.

For more information, see The profit and loss statement.

Only copies are required

Depreciation is a term used to describe the reduction in an asset's useful life. It is an accounting method used to write off the cost of an asset which reduces over time due to age, wear and tear.

The depreciation schedule for a business entity indicates the accounting or taxation value of the 'wear and tear' allowed as a business expense for the accounting period. It can be used to:

• determine if a valuation is required for plant and equipment
• determine the amount claimed for any type of depreciation that is not an allowable expense for Social Security purposes
• provide details of the depreciated value recorded for individual assets held by the company. The depreciated value may not reflect the current market value

For more information, see The depreciation schedule.

Only copies are required

The balance sheet is a snapshot of the assets and liabilities of the company at a point in time.

The value recorded for assets on the balance sheet may be the original cost of purchasing the item, the depreciated value of the item for tax purposes, or the value directors have placed on the item rather than the current market value.

It must be noted that the financial position of a business as detailed in the balance sheet does not necessarily equate to the current market value or 'worth' of a business. This is why Services Australia often needs to revalue business assets, particularly property and listed shares at their 'market' or realisable value.

For more information, see The balance sheet.

Only copies are required

Whereas the balance sheet may show the total amount owed to a shareholder, the shareholder loan account shows not only the amount owed to each shareholder but also the nature of increases and decreases in a shareholder's loan account balance during the financial year.

It is used to determine how much is owed to the customer and their associates by the company and to determine which liabilities may be recognised.

Only copies are required

To understand the amounts recorded in the financial statements and any extraordinary circumstances affecting the company.

Only copies are required

A council rates notice will contain some or all of the following information:

• identification for the parcel of land, for example, Shire, folio
• site value or land value
• capital improved value (CIV)
• the date of the council valuation of the property

Note: the rates instalment notice does not contain all the information required by Services Australia in respect of real estate. The instalment notice often only provides details of the amount owing on the rates at that time. The valuation on the council rates notice is not used as the current market value for the purposes of determining the payability of income support.

It is also used to ensure the correct identification of each property in case a valuation is required.

Only copies are required

When making an assessment of the income and assets of a customer in respect of their involvement in a private company Services Australia will take into account all details provided by the customer and their representative.

The customer has the option of providing any additional information they would like Services Australia to consider.

This information may be relevant to the determination of the extent of the customer's involvement in the private company or may be relevant to the financial circumstances of the private company.

This information may be relevant to make an accurate first assessment and reduce the need for reviews and appeals.

Copies of these documents need only be requested by the CAO in certain circumstances

The Memorandum of Association identifies:

• the name of the company
• the liability of the shareholders
• the amount of share capital and the objectives of the company (for example, to operate in the retail or building industry)

The Articles of Association (or Constitution) identifies:

• how the directors are appointed
• powers and duties of the directors
• the rules on how the company is to be run and voting rights of the shareholders

This document would only be requested by Services Australia if the information recorded on the Private Company form (MOD PC) was insufficient to make a determination. For example, there may be some doubt as to the powers of the directors or rights and interest of the shareholders.

Copies of these documents need only be requested by the CAO in certain circumstances

The return is a form all Australian companies must lodge annually. It includes statements of all company shareholders and the number and type of shares held by them individually.

It also includes a statement of all company officers (directors and the company secretary) as at the end of the financial year.

The information may be relevant to confirm the extent of the customer's involvement in this company, as director and/or shareholder, to determine beneficial ownership of shares and to establish the main activity of the company.

This document would only be requested by Services Australia if the information recorded on the Private Company form (MOD PC) was insufficient to make a determination.

Copies of these documents need only be requested by the CAO in certain circumstances

The information contained in the minutes may be relevant to confirm any declarations with respect to dividends, any extraordinary activity of the company, any influences affecting the profitability of the company and the ability of the company to pay its debts as and when they become due (solvency).

This document would only be requested by Services Australia if the information recorded on the Private Company form (MOD PC) was insufficient to make a determination.

Copies of these documents need only be requested by the CAO in certain circumstances

The certificate of title provides the following information:

• identification for the property, for example, location details
• the name of the current proprietor and the date they became the proprietor
• a history of the previous registered owners
• the type of ownership of each proprietor, for example, tenants in common, joint tenants
• details of debts secured by the property, for example, the name of the lender

It can be used to confirm ownership of each property; the date property was obtained by the company and the date it was transferred by our customer.

This document would only be requested by Services Australia if the information recorded on the Private Company form (MOD PC) was insufficient to make a determination.

Copies of these documents need only be requested by the CAO in certain circumstances

This document would only be requested by Services Australia if the information recorded on the Private Company form (MOD PC) was insufficient to identify the investment on Services Australia (SIN) system to obtain the current market value.

Copies of these documents need only be requested by the CAO in certain circumstances

This document would only be requested by Services Australia if the information recorded on the Private Company form (MOD PC) was insufficient to identify the managed investment on Centrelink Managed Investment (MIN) system to obtain the current market value.

Copies of these documents need only be requested by the CAO in certain circumstances

These documents would only be requested by Services Australia if the information recorded on the Private Company form (MOD PC) was insufficient to make a determination. Some liabilities may need to be apportioned according to the security for the loan or the purpose for which the loan was taken out.