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This tab includes all labels in Item 8 financial information about the company, including assets and liabilities and attributed foreign income.

Label N - Functional currency translation rate

Complete label N Functional currency translation rate item 8 if the company keeps its accounts solely or predominantly in a foreign currency (its applicable functional currency) and has elected to use that functional currency for its tax accounts which it then translates to Australian dollars (A$) to complete its tax return. If the company is using a functional currency, see the Guide to functional currency rules on the ATO website.

Show at label N Functional currency translation rate the exchange rate employed to translate the taxable income figure from the applicable functional currency into A$. The translation rate is the amount by which the functional currency amount must be divided in order to reflect an equivalent amount of Australian dollars (A$) i.e. the number of non-A$ currency units that equal one A$D, rounded to 4 significant figures.

Do not complete label N Functional currency translation rate if the company has elected to employ a non-A$ functional currency only to calculate net income attributable to the activities of an overseas Permanent Establishment, Controlled Foreign Company, Off-shore Banking Unit or Transferor Trust. See the Foreign income return form guide  on the ATO website.

If label N Functional currency translation rate is completed, also complete label O Functional currency chosen.

CCH References

21-200 Attributable income of a CFC

23-070 General translation rules

Label O - Functional currency chosen

Complete label O if label N Functional currency translation rate has been completed.

Select the functional currency code from the list at this label.

Show at label O the currency code from International Standard ISO 4217 which corresponds to the functional currency chosen by the company. Refer to the Guide to functional currency rules available from the ATO website.

CCH References

10-140 Foreign exchange and futures transactions

Label S - Purchases and other costs

Show at this label the cost of direct materials used for manufacture, sale or exchange in deriving the gross proceeds or earnings of the business. This amount includes freight inwards.

Click the label to enter the various amounts in a Generic Schedule / Worksheet.

CCH References

9-160 Calculating Trading stock gross profit

Label A - Opening stock

Show at this label the total value of all trading stock on hand at the beginning of the income year or accounting period for which the company tax return is being prepared. The amount shown by the company at label A is the value for income tax purposes under section 70-40 of the ITAA 1997 or for small business entities using the simplified trading stock rules subsection 328-295(1) of the ITAA 1997.

Click the label to enter the various amounts in a Generic Schedule / Worksheet.

For consolidated and MEC groups, refer to the Consolidation reference manual for more information on trading stock held by entities that join the group.

CCH References

9-160 Calculating Trading stock gross profit

Label B - Closing stock

Click the label to enter the various amounts in a Generic Schedule / Worksheet.

 Closing Stock code: Select the relevant code from the list to indicate the method used to value closing stock for income tax purposes. Where more than one method is used, select the code applicable to the largest claim.

For information on the circumstances in which packaging items held by a manufacturer, wholesaler or retailer are 'trading stock' as defined in section 70-10 of the ITAA 1997 refer to Taxation Ruling TR98/7 - Income tax: whether packaging items (i.e. contains, labels, etc) held by a manufacturer, wholesaler or retailer are trading stock and Taxation Ruling TR 98/8 - Income tax: whether materials and spare parts held by a taxpayer supplying services are trading stock.

Also refer to the Consolidation reference manual available on the ATO website.

CCH References

9-160 Calculating Trading stock gross profitv

Trading stock election

A company may elect to value an item of trading stock below the lowest value of cost, market selling value, or replacement value, because of obsolescence or any other special circumstances. The value that is elected must be reasonable.

For guidelines on trading stock valuations where obsolescence or other special circumstances exist refer to Taxation Ruling TR 93/23 - Income tax: valuation of trading stock subject to obsolescence or other special circumstances.

Where an election is made, select Y from the list, otherwise leave blank.

CCH References

9-160 Calculating Trading stock gross profit

Label C - Trade debtors

Show at this label the total amounts owing to the company at year end for goods and services provided during the income year, that is the gross amount of current trade debtors from the company's accounts. You should also include this amount at label D All current assets item 8.

Click the label to enter the various amounts in a Generic Schedule / Worksheet.

Label D - All current assets

Show at this label all current assets of the company, including cash on hand, trade debtors, short-term bills receivable, inventories and cash at bank. You should also include the amount shown at label C Trade debtors item 8.

Click the label to enter the various amounts in a Generic Schedule / Worksheet.

Label E - Total assets

Show at this label all assets of the company, including current, fixed, tangible and intangible assets. You should also include the amount shown at label D All current assets item 8.

For MYOB AO, click the label to enter the various amounts in a Generic Schedule / Worksheet.

Label F - Trade creditors

Show at this label the total amounts owed by the company at year-end for goods and services received during the income year; that is current trade creditors. You should also include this amount at label G All current liabilities item 8.

Click the label to enter the various amounts in a Generic Schedule / Worksheet.

Label G - All current liabilities

Show at this label the total obligations payable by the company within the coming year. You should also include the amount shown at label F Trade creditors item 8.

Click the label to enter the various amounts in a Generic Schedule / Worksheet.

Label H - Total liabilities

Show at this label all liabilities of the company, including other creditors and deferred liabilities such as loans secured by mortgage and long-term loans. You should also include the amount shown at label G All current liabilities item 8.

Click the label to enter the various amounts in a Generic Schedule / Worksheet.

Label J - Total debt

Show at this label the average total debt of the company for the income year. The average total debt is calculated by adding the opening and closing balances of the total debt of the company for the income year, and dividing this sum by 2.

Click the label to enter the various amounts in a Generic Schedule / Worksheet.

Label K - Commercial debt forgiveness

Show at this label the net amount of commercial debts owed by the company that were forgiven during the income year-refer to Division 245 of the ITAA 1936. Broadly, a debt is a commercial debt if any part of the interest payable on the debt is or would be an allowable deduction. A debt is forgiven if the company's obligation to pay the debt is released or waived or otherwise extinguished other than by payment in cash. Click the label to enter the various amounts in a Generic Schedule / Worksheet.

The net amount of commercial debts forgiven must be applied to reduce the company's deductible revenue losses, net capital losses, certain undeducted revenue or capital expenditure and the cost base of certain CGT assets, in that order.

Refer to Appendix 1 of the Company tax return instructions.

CCH References

16-910 Commercial debt forgiveness

Label J - Franked Dividends paid

Franked Dividends Paid amounts integrate from the Interest and Dividends Paid Schedule (BT) which is lodged with the return. Click the label to open the Interest and Dividends Paid (BT).

CCH References

4-100 Overview: Taxation of Dividend Recipients

Label K - Unfranked dividends paid

Unfranked Dividends Paid amounts integrate from the Interest and Dividends Paid Schedule (BT) which is lodged with the return. Click the label to open the Interest and Dividends Paid (BT).

CCH References

4-100 Overview: Taxation of Dividend Recipients

Label M - Franking account balance

Franking Account Balance amounts integrate from the Franking Account worksheet which is NOT lodged with the return. Click the label to enter the various amounts in Franking Account worksheets.

Enter at this label the balance of the franking account at the end of the current income year, unless it is a deficit balance. If there is a deficit balance in the franking account at the end of the income year, a Franking account tax return 2018 must be lodged.

For how an R&D tax offset affects your franking account, click this link to the ATO website to download a PDF on the Franking account tax return and instructions.

For information about the simplified imputation system, refer to the imputation products on the ATO website.

CCH References

4-700 Franking accounts

4-730 Franking surplus or deficit

Label H - Excess franking offsets

Show at this label any excess franking tax offset calculated. There are three steps to the calculation.

Excess franking rebate calculation

Show at label H, any excess franking tax offset calculated as follows:

  1. Calculate the amount of franking tax offsets that the company is entitled to. Franking tax offsets are available under Division 207 of the ITAA 1997 as a result of receiving a franked distribution and Subdivision 210-H of the ITAA 1997 as a result of receiving a franked distribution franked with a venture capital credit. The amount of franking tax offset that a company is entitled to, is equal to the share of franking credits included in distributions received from partnerships and trusts, and the amount of franking credits included at item 7, label J-Franking credits.

    Do not include any franking tax offsets that are subject to the refundable tax offset rules under Division 67 of the ITAA 1997. For example, franking tax offsets of a life insurance company are generally subject to the refundable tax offset rules to the extent they relate to distributions paid on shares and other membership interests held on behalf of policy-holders. These amounts should not be included. Generally, however, the franking tax offsets of other companies are not subject to the refundable tax offsets rules.
  2. Calculate the amount of income tax that would be payable, taking into account all tax offsets (including its foreign income tax offsets), with the exception of the following tax offsets:

    • Any franking deficit tax offsets, and

    • Any tax offsets subject to the tax offset carry forward rules or the refundable tax offset rules, and

    • Any tax offset arising from a franking deficit tax (FDT) liability.

  3. Calculate the amount of 'excess franking offset'. If the amount of franking tax offsets from step one exceeds the amount of hypothetical tax calculated at step 2 the excess is the amount of 'excess franking offset' which should be recorded at label H-Excess franking offset.

If the company has excess franking offsets, it may convert the excess franking offsets into an amount of tax loss to carry forward to later income years.

Sample calculation - excess franking rebate

For the current income year ABC Company Ltd has the following:

  • Item 6 label H Total dividends 280 Franked distribution.

  • Item 7 label J Franking credits 120.

  • Item 7 label X Other deductible expenses 100.

The $120 franking tax offset is not subject to the refundable tax offset rules in Division 67 of the ITAA 1997. ABC Company Ltd has no net exempt income for the year and it does not have a tax loss for the year.

ABC Company Ltd would work out its 'excess franking rebate' as follows:

  1. Calculate the amount of franking tax offsets that it is entitled to. In this instance, ABC Company Ltd is not entitled to a refund of excess franking tax offsets; therefore it is entitled to franking tax offsets of $120. However, for the purposes of calculating the 'excess franking rebate', these offsets are ignored; see step two below.

  2. Calculate the amount of income tax payable ignoring franking tax offsets:


Taxable income $300 = ($280 + $120 - $100)
Gross tax $90
The excess franking rebate is $30.
ABC Company Ltd would record $30 at label H Excess franking rebate item 8.
ABC Company Ltd would now convert this amount of 'excess franking rebate' into a tax loss by dividing the 'excess franking rebate' amount ($30) by the corporate tax rate (30%) which results in a tax loss amount of $100. ABC Company Ltd would record the amount of this tax loss at label U Tax losses carried forward to later income years, item 13.

Deducting Prior or Current year losses

Legislation to ensure companies will not waste prior year or current year losses against franked dividend income has been enacted. The rule about choosing to deduct a prior year loss applies to deductions of tax losses in the year in which 1 July 2002 falls and later years. The rule ensuring current year losses are not wasted applies to the income year in which 1 July 2002 falls and later years. These new rules may be found in Schedule 8 to Taxation Laws Amendment Act (No.5) 2003.

Under these rules a current year loss (that is, the excess of allowable deductions over assessable income and exempt income) that would otherwise be incurred but for deriving franked dividend income may be carried forward as a tax loss for consideration as a deduction in later income years. Broadly, the amount of current year loss that may be carried forward under these rules is determined by reference to the amount of any unused franking tax offset (excess franking rebate).

If the company is in receipt of franked distributions from a New Zealand franking company, refer to the instructions found on Trans-Tasman Imputation: How to claim Australian franking credits attached to New Zealand dividends, available on the ATO website.

CCH References

3-075 Converting excess franking offsets to tax loss

4-825 Franked dividends received by loss companies

Label N - Loans to shareholders and their associates

Complete this label only if:

  • The company is a private company or a closely held corporate limited partnership.

  • The company or a closely held corporate limited partnership had a loan account to a shareholder or an associate which had a debit balance at any time during the income year.

  • The recipient of the loan was a natural person, partnership or trust.

Click the label to enter the various amounts in a Generic Schedule / Worksheet.

Action code: Select the relevant code from the list.

Label D - Total salary and wage expenses

Enter at this label the total salary, wage and other labour costs incurred, including directors' remuneration, as per payment summaries.

Click the label to enter the details or dissect amounts in a Generic Schedule / Worksheet.

Action code: Select from the list the code that matches the description of the expense component where salary and wage expenses have been wholly or predominantly reported.

Label Q - Payments to associated persons

Show at this label the amounts, including salaries, wages, commissions, superannuation contributions, allowances and payments in consequence of retirement or termination of employment, paid by a private company to associated persons.

An associated person is a current or former shareholder or director of the company, or an associate of such a person.

You should also include the amounts of salaries and wages paid to associated persons at label D Total salary and wage expenses item 8.

Label G - Gross foreign income

Show at label G Gross Foreign Income assessable income derived by the company from foreign sources, grossed up by the amount of the foreign tax paid.

Gross foreign income integrates from the Foreign income worksheet (for). Click the label to open the Foreign income worksheet (for).

Label R - Net foreign income

Show at label R assessable income derived by the company from foreign sources, grossed up by the amount of foreign tax paid, but net of expenses. If the amount at R is a loss, precede the amount with a negative.

Net foreign income amounts will integrate to both 8/R and 7/C from the Foreign Income worksheet (for). Click the label to open the Foreign income worksheet (for).

See Capital gains tax on the ATO website.

If a subsidiary member of a consolidated or MEC group must lodge a company tax return for any non-membership periods during the year of income, that company may also need to lodge a Losses schedule for the non-membership periods.

Refer to Consolidated groups losses schedule instructions (NAT 7891). The ATO provides information on their Consolidation home page.

If a head company needs to complete a Consolidated groups losses schedule, it might also need to complete a Capital gains tax (CGT) schedule. Refer to the Guide to capital gains tax (NAT 4151) on the ATO’s Capital gains tax website.

Refer to the ATO Losses schedule instructions for the current income year.

CCH References

21-680 Entitlement to foreign income tax offset

21-700 What is foreign income tax?

Label B - Listed Country

Show at label B the amount of attributed foreign income from controlled foreign entities in listed countries. Listed countries are countries that are listed countries in Part 8, regulation 19 of the income Tax Assessment (1936 Act) Regulation 2015.

Click the label to enter the various amounts in a Foreign income worksheet (for).

Refer to the ATO publication Foreign income return form guide (NAT 1840).

CCH References

21-110 Scope of CFC Rules

21-130 Listed countries

21-360 Foreign investment funds (pre-2010/11)

21-680 Entitlement to foreign income tax offset

21-700 What is foreign income tax?

21-770 Tax paid by CFCs

21-800 Foreign losses

Label U - Unlisted country

Attributed Foreign Income

Show at label U the amount of attributed foreign income from controlled foreign entities in unlisted countries. Unlisted countries are countries that are not listed countries in Part 8, regulation 19 of the income Tax Assessment (1936 Act) Regulation 2015.

Click the label to enter the various amounts in a Foreign income worksheet (for).

Refer to the ATO publication Foreign income return form guide (NAT 1840).

CCH References

21-110 Scope of CFC Rules

21-130 Listed countries

21-360 Foreign investment funds (pre-2010/11)

21-680 Entitlement to foreign income tax offset

21-700 What is foreign income tax?

21-770 Tax paid by CFCs

21-800 Foreign losses

Label V - Transferor Trust

Attributed Foreign Income

Show at label V the amount of attributed foreign income from transferor trusts.

Click the label to enter the various amounts in a Foreign income worksheet (for).

Refer to the ATO publication Foreign income return form guide (NAT 1840).

CCH References

21-110 Scope of CFC Rules

21-130 Listed countries

21-360 Foreign investment funds (pre-2010/11)

21-680 Entitlement to foreign income tax offset

21-700 What is foreign income tax?

21-770 Tax paid by CFCs

21-800 Foreign losses

Label T - Total TOFA Gains

Show at label T Total TOFA gains the total of all assessable TOFA gains from financial arrangements recognised at item 6 and item 7.

In working out a company’s total TOFA gains ensure the company’s assessable TOFA gains from financial arrangements included in any of the following is taken into account:

  • D Gross distribution from partnerships item 6 

  • E Gross distribution from trusts item 6 

  • F Gross interest item 6 

  • H Total dividends item 6 

  • JK Unrealised gains on revaluation of assets to fair value Income from financial arrangements (TOFA) item 6 

  • R Other gross income item 6

  • E TOFA income from financial arrangements not included in item 6 or 7.

Click the label to enter the details or dissect amounts in a Generic Schedule / Worksheet.

CCH References

23-000 Taxation of financial arrangements - TOFA

Label U - Total TOFA Losses

Show at label U Total TOFA losses the total of all allowable TOFA gains from financial arrangements recognised at item 6 and item 7.

In working out a company’s total TOFA losses, ensure the company’s allowable TOFA losses from financial arrangements included in any of the following is taken into account:

  • D Gross distribution from partnerships item 6 

  • E Bad debts item 6 

  • V Interest expenses within Australia item 6 

  • J Interest expenses overseas item 6 

  • G Unrealised losses on revaluation of assets to fair value item 6 

  • S All other expenses item 6

  • W TOFA deductions from financial arrangements not included in item 6 or 7.

Click the label to enter the details or dissect amounts in a Generic Schedule / Worksheet.

CCH References

23-000 Taxation of financial arrangements - TOFA

Label S - TOFA gains from unrealised movements in the value of financial arrangements

Show at label S the total of all TOFA gains recognised at item 6 as a result of unrealised movements in the value of financial arrangements.

A company may have TOFA gains from unrealised movements in the value of financial arrangements as a result of making certain TOFA rules tax-timing method elections.

Click the label to enter details or dissect amounts in a Generic Schedule / Worksheet.

For more information, see the Guide to the taxation of financial arrangements (TOFA) rules.

CCH References

23-000 Taxation of financial arrangements - TOFA

 

 

 

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