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Companies

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									Company tax glossary
Introduction

General information

Income items

Expense items

Profit and loss information items

Reconciliation to taxable income or loss items

Financial and other information

Losses information and tax offsets

Calculation statement items

Capital gains tax (CGT) schedule items

Losses schedule items

List of useful publications
Introduction – companies
Most of the statistics reported in the company tax tables (detailed tables and tables in the company
tax chapter) cover the period for the 2001–02 income year. For most entities the 2001–02
income year covers the period from 1 July 2001 to 30 June 2002. However, some companies may
use a substituted accounting period. Reasons for using a substituted accounting period could be
that a company is owned by a multinational and the holding company wishes to have all members of
the corporate group operate under the same financial year. For example, the traditional financial
year in the United States follows the calendar year, while the British financial year ends in March.
(The Australian financial year runs from 1 July to 30 June.) Depending on the accounting period
chosen, the activity reported could cover a 12-month period starting as early as 1 December 2000
(on „early December‟ balancers) or finishing as late as 31 December 2002 (on „late December‟
balancers).

The statistics were compiled from the 2002 company tax returns, 2002 capital gain tax (CGT)
schedules and the 2002 losses schedules processed by 31 October 2003. The statistics are not
necessarily complete and will continue to change as data from 2002 tax returns and schedules
processed after 31 October 2003 is included.

Company tax returns can be lodged either electronically or in paper form. A copy of the company tax
return is in the appendix Taxation statistics 2001–02 or can be downloaded from Taxation statistics
2001–02: Glossaries on the Tax Office website.

Statistics for most items on the 2002 company tax return are included in the company detailed
tables. To fulfil the Tax Office‟s privacy regulations, statistics for some items may not be included.

Statistics for some items on the 2002 CGT schedule and the 2002 losses schedule are also reported
in the company tax detailed tables. Copies of both schedules are in the appendix of Taxation
statistics 2001–02 or can be downloaded from Taxation statistics 2001–02: Glossaries on the Tax
Office website.

Apart from the company tax detailed tables and company tax chapter tables, the CGT tables
(detailed tables and chapter tables) also contain statistics related to companies. The CGT-company
statistics were compiled from 2002 company tax returns and 2002 CGT schedules processed by
31 October 2003.

Since the introduction of self-assessment for companies, the statistical items tabulated are those
recorded on company tax returns and schedules by the persons preparing those returns and
schedules.

The statistical items tabulated are described in this glossary. Descriptions for the company items
were sourced from these Tax Office publications: Company tax return instructions 2002, Guide to
capital gains tax 2001–02 and the Losses schedule instructions 2002. These publications contain
directions on what to include at each item on the return or schedule, including how to calculate
amounts for some items. For the purposes of this glossary, the directions are set out in an edited
form to describe the company items in the detailed tables and chapter tables. Please see these
publications for a complete description of the company items included in this glossary.

More information on the items described can be found in other Tax Office publications, tax legislation
or taxation rulings. Some may be downloaded by clicking on the links provided from Taxations
statistics 2001–02: Glossaries on the Tax Office website. Alternatively they may be viewed and
downloaded from different locations on the Tax Office website at www.ato.gov.au or the Tax Office
legal database at law.ato.gov.au/atolaw/index.htm
A list of useful Tax Office publications is provided within the glossaries, a full list of documents
referred to within this entity is listed at the back. The documents available to be downloaded can be
found within the Return forms and other publications section of Taxations statistics 2001–02:
Glossaries. Some of the Tax Office publications are included in the Taxation statistics 2001–02 CD-
ROM. (To order a copy of the book and CD-ROM please send an e-mail to taxstats@ato.gov.au)

This glossary only presents general descriptions of terms/items. It does not provide full technical or
legal definitions. In addition, the publications mentioned in this glossary (or included in the Taxation
statistics 2001–02 CD-ROM) refer to the publication edition available during the 2001–02 income
year (that is, the edition taxpayers were using to help them complete their 2002 company tax
return, 2002 CGT schedule and 2002 losses schedule).

Note:

0       Indicates that the amount tabulated for the item is zero or has been
        rounded to zero for some company tax chapter tables in Taxation statistics
        2001–02. Rounding may cause totals to differ from the sum of
        components.

n.a.    indicates „not available‟ or „not applicable‟ as the case may be.




Time series table statistics

Statistics reported in the time series tables (table 4.10 in the company tax
chapter and company tax detailed table 7) cover historical income years (1993–
94 to 2001–02). Historical statistics were compiled from past annual company
income tax returns. Statistics for some historical income years were updated for
this edition of Taxation statistics.

Because the statistics for the 2001–02 income year are not necessarily complete,
caution should be exercised in making comparisons between the statistics for the
current year and prior years. Better comparisons between the 2001–02 income
year statistics and the statistics from previous years will be possible when
Taxation statistics 2002–03 is published. In that edition, the 2001–02 income
year statistics will include data from returns and amendments processed up to
31 October 2004.
General information – companies

Company

For tax purposes, companies include all bodies or associations, incorporated or unincorporated,
excluding partnerships and non-entity joint ventures. For tax purposes, limited partnerships and
some corporate unit trusts and public trading trusts are treated as companies.


Taxable company (or taxable)

A company is considered taxable when the calculated tax payable (or net tax) of the company is
greater than $0.


Non-taxable company (or non-taxables)

A company is considered non-taxable when the calculated tax payable (or net tax) of the company is
equal to $0.


Number (no.)

This refers to the number of company taxpayers (or processed company tax returns) included in the
table. The number (no.) can also refer to the number of company taxpayers that reported or
claimed an amount for a specific item on their return.

For example, in the detailed or chapter tables, you may find a table such as this:



Gross rent     no.               xx,xxx

               $          x,xxx,xxx,xxx

The table reports that there are xx,xxx company taxpayers who reported gross rent worth more
than $x billion on their returns. Alternatively, it can be said that there are xx,xxx processed
company tax returns which reported gross rent worth $x billion.


Australian business number (ABN)

The ABN is a unique identifier which allows businesses to deal with the Tax Office and ultimately
with other government departments and agencies. It is available to other Australian Government,
state, territory and local government regulatory bodies to streamline registration and reporting
requirements. It is used by businesses and other entities for business-to-business transactions as
well as business-to-government transactions.
Industries (or business activities) and industry (or business activity) coding

Returns (or company taxpayers) with direct business income were coded to (or classified under) the
business activity from which they derived the greatest gross income or incurred the smallest loss.
(Income tax returns allow for only one business industry code to be shown. As a result, company
taxpayers who may derive income from more than one business activity classify/code themselves
under the industry/industry code from which the greatest proportion of their gross income was
derived.)

The names of the broad and fine industry groups used in the tables are based on the Australian
and New Zealand Standard Industrial Classification (ANZSIC) system. The broad industry groups
are the same as the ANZSIC divisions, while the fine industry groups are similar to the ANZSIC
groups (three-digit level code). The numerical codes corresponding to these industry names are
referred to as „business industry codes‟. They are an extension of the 4-digit ANZSIC code to 5 digits
made by the Tax Office.

A complete list of the industries and the corresponding industry codes for these industries for the
2001–02 income year are found in the Tax Office publication, Business industry codes 2002.

In company tax detailed table 4 parts A, B, C, D and E („Selected items, by fine industry‟) statistics
are reported by broad and fine industry groups. While the table provides a list of „fine industries‟
that are classified under a broad industry group, a more comprehensive list is found in Business
industry codes 2002.

The fine industry groups (and the statistics referring to the fine industry group) listed in company
tax detailed table 4 parts A, B, C, D and E are the aggregate of similar industries with different
business industry codes. For example, the fine industry, „Textile, clothing and footwear wholesaling‟
under the broad industry group, „Wholesale trade‟ is composed of several industries listed under
industry codes 47210, 47220 and 47230 (which includes industries, businesses or services such as
„tents wholesaling‟, „sail cloth wholesaling‟, „lingerie wholesaling‟, „footwear wholesaling‟ and others).

Note:

   Some fine industries have been aggregated, in order to meet privacy regulations.

   Prior to the 1995–96 income year, the Australian Standard Industry Classification (ASIC) system
    was used to classify industries. Therefore, it is not possible to do any long time series analysis
    for industries because the industry groups are not comparable.


Primary production (PP)

Production resulting directly from the cultivation of land; the maintenance of animals or poultry for
the purpose of selling them or their bodily produce, including natural increase; fishing operation;
forest operations; or horticulture; and includes the manufacture of dairy produce by the person who
produced the raw material used in that manufacture.

Primary production industries therefore include industries listed/classified under the „Agriculture,
forestry and fishing‟ broad industry group.

For more information on primary production and primary producers, refer to the Tax Office
publication, Information for primary producers 2001–02.
Non-primary (other) production (NPP)

Production not resulting from primary production activities mentioned above.

Non-primary production industries include all the other industries not classified under the
„Agriculture, forestry and fishing‟ broad industry group.


Non-taxable/nil company returns

These are company tax returns with no income, expense or balance sheet data present. (These
companies are classified under code: 98000 in the Tax Office publication, Business industry codes
2002).


State/Territory/Regions

Derived from the main business postcode of the company. Cases where the business postcode was
not shown or an invalid postcode was used have been classified as „other‟, and cases where
companies were resident overseas have been shown as „overseas‟.

Note: In the case of large companies or companies with branches in different locations, it is likely
that they will only lodge one company tax return (with only one business postcode). They will not
lodge separate returns for all their branches/outlets. Hence, company data for a
state/territory/region may actually refer to business activities that occurred in a different
state/territory/region (for example, the total income reported by company ABC whose main office is
located in New South Wales may actually refer to the total income of all the retail outlets of
company ABC which are located in different states other than New South Wales).


Status/type of company (item 3)

Resident company (C1)

A company that is incorporated in Australia or, if not incorporated in Australia, carries on business in
Australia. It either has its central management and control in Australia, or its voting power
controlled by shareholders who are residents of Australia.

Non-resident company (C2)

A company that is not a resident company.

Co-operative (D1)

A company in which the number of shares held by one person is limited, the shares are not quoted
on a stock exchange, and the business is carried on primarily for:

   acquiring commodities or goods for disposal or distribution to its members

   disposing of or distributing its members‟ commodities or goods

   storing, marketing, packaging or processing its members‟ commodities

   rendering services to its members, or

   obtaining funds from its members so that it can make loans to them, enabling them to acquire
    residential and/or business premises.
Non-profit company (D3)

A company that is not carried on for the purpose of profit or gain to its individual members. The
terms of the memorandum or articles of association, rules or other documents constituting the
company or governing its activities must prohibit it from making any distribution in money, property
or otherwise to its members.

Strata title bodies corporate (D4)

Strata title bodies corporate are constituted under legislation that creates a special form of legal
ownership, referred to in some states and territories as strata title, unit title, group title or cluster
title. For tax purposes, they are treated as public companies.

Pooled development fund (D5)

An eligible investment company registered under the Pooled Development Funds Act 1992 as a
pooled development fund to provide equity capital for eligible activities to resident Australian
companies with total assets not exceeding $50 million (investee companies are referred to as small–
medium enterprises). Pooled development funds are taxed in the same way as other companies
except that they are taxed at concessional rates on certain components of income: the small–
medium enterprise income component is taxed a 15% and the unregulated investment component is
taxed at 25%.

Limited partnership (D6)

A partnership in which the liability of at least one partner is limited. For tax purposes, limited
partnerships are called corporate limited partnerships and are effectively treated as companies.

Corporate unit trust (D7)

A unit trust that qualifies as a public unit trust and, as part of an arrangement for reorganising a
company or company group, a business or other property of a company has been transferred to the
unit trust and shareholders of the company involved in the reorganisation receive entitlements to
take up units in the unit trust.

A public unit trust is a fixed unit trust which is a widely held unit trust – as defined in section 272-
105 of Schedule 2F to the Income Tax Assessment Act 1936 (ITAA 1936) – at all times during the
income year.

Public trading trust (D8)

A public unit trust that is also a trading trust and is either a resident in the income year concerned
or was a public trading trust in a previous income year. Public trading trusts are defined as
companies under section 221AK of the Income Tax Assessment Act 1936.

Private company (D9)

Includes any company that is not a public company.
Public company (D10)

A public company as defined in the Income Tax Assessment Act 1936 (section 103A) for the income
year. Companies are public companies for tax purposes if:

   the company‟s shares are listed on the stock exchange in Australia or elsewhere on the last day
    of the income year

   at all times during the income year, the company was a co-operative

   the company has not, at any time since its formation, been carried on for the purposes of profit
    or gain to its individual members and was, at all times during the income year, prohibited by the
    terms of its constituent document from making any distribution (whether in money, property or
    otherwise) to its members or to relatives of its members, or

   the company is:

       a mutual life assurance company

       a friendly society dispensary

       a body constituted by a law of the Commonwealth or of a state or territory and established
        for public purposes, not being a company within the meaning of the law in force in a state or
        territory relating to companies

       a company in which a government body had a controlling interest on the last day of the
        income year, or

       a public company subsidiary.


Partnerships

For tax purposes, a partnership is an association of people who carry on business as partners, or
who receive income jointly, but does not include a company. Partners contribute their time, talents
and/or capital towards the partnership and, in return, share in both the profits/losses and
responsibilities.

Partnerships generally do not pay tax in their own right. Members of the partnership pay tax at their
individual tax rate on their share of partnership income included on their individual tax return.


Trusts

A trust exists where a person, the „trustee‟, is under an obligation to hold property or income for the
benefit of other people, known as „beneficiaries‟. This obligation usually arises under the express
terms of a trust, but may also be imposed by court order or declaration, or by the operation of law.
Although the trustee holds the legal title to the property, they must deal with it in accordance with
the terms of the trust for the benefit of the beneficiaries.

Beneficiaries can include public and charitable institutions, and the potential beneficiaries of a
discretionary trust can include people not yet born.

A trust is not a separate taxable entity and trusts do not pay tax in their own right.
Capital gains

An entity makes a capital gain (or profit) as a result of a CGT event, for example when an entity
sells an asset for more than they paid for it. An entity can also make a capital gain if a managed
fund or other unit trust distributes a capital gain to the entity.


Capital gains tax (CGT) event

CGT events are the different types of transactions or events that attract CGT. Most CGT events
involve a CGT asset, from which the entity makes a capital gain or loss. There are a wide range of
CGT events. Some happen often and affect many different entities, while others are rare and affect
only a few people. A summary of CGT events is included in appendix 3 of the Tax Office publication,
Guide to capital gains tax 2001–02. The most common CGT even happens if the entity disposes an
asset to another entity (for example, if they sell or give away an asset). Other CGT events from
which an entity can make a capital gain or capital are listed in the capital gains tax chapter of
Taxation statistics 2001–02.


Capital gains tax (CGT) asset

Many CGT assets are easily recognisable, for example, land and buildings, shares in a company and
units in a unit trust. Other CGT assets are not so well understood, for example, contractual rights,
options, foreign currency and goodwill.

CGT assets fall into three categories: collectables, personal use assets and other assets.

Collectables

Include the following items that are used or kept mainly for the personal use or enjoyment of the
entity and their associates:

   paintings, sculptures, drawings, engravings or photographs, reproductions of these items or
    property of a similar description or use

   jewellery

   antiques

   coins or medallions

   rare folios, manuscripts or books, and

   postage stamps or first day covers

   A collectable is also:

   an interest in any of the above items

   a debt that arises from any of the above items, or

   an option or right to acquire any of the items above
Personal use assets

A personal use asset is:

   a CGT asset, other than a collectable, that is used or kept mainly for the personal use or
    enjoyment of the entity and their associates

   an option or a right to acquire a CGT asset of this type

   a debt resulting from a CGT event involving a CGT asset kept mainly for the personal use or
    enjoyment of the entity, or

   a debt resulting from the entity doing something other than gaining or producing their
    assessable income or carrying on a business.

Personal use assets include such items as boats, furniture, electrical goods and household items.

All other assets

Assets that are not collectables or personal use assets include:

   land and buildings

   shares in a company

   rights and options

   leases

   units in a unit trust

   instalment receipts

   goodwill

   licenses

   convertible notes

   the entity‟s home

   contractual rights

   foreign currency, and

   any major capital improvement (above the improvement threshold) made to certain land or pre-
    CGT assets. (Improvement thresholds are listed on page 5 of the Tax Office publication, Guide to
    capital gains tax 2001–02.


Methods of calculating a capital gain

There are three methods of calculating a capital gain. The three methods are described below. For
more on the three methods please see chapter 2 of the Tax Office publication, Guide to capital gains
tax 2001–02.
Indexation method

The indexation method is one of the ways to calculate an entity‟s capital gain if the entity bought a
CGT asset before 11:45 am on 21 September 1999. This method allows the entity to increase the
cost base by applying an indexation factor (based on increases in the Consumer Price Index up to
September 1999).

This method cannot be used for:

   CGT assets brought after 11:45 am on 21 September 1999, or

   expenditure relating to a CGT asset acquired after that date.

Discount method

The discount method is one of the ways to calculate capital gain if:

   the CGT event happened after 11:45 am on 21 September 1999, or

   the entity acquired the asset at least 12 months before the CGT event.

If an entity uses this method, they do not index the cost base, but they may be able to reduce the
capital gain by the CGT discount. However, they must first reduce their capital gains by the amount
of all their available capital losses (both current year and prior years), before they discount any
remaining capital gain.

Other method

To calculate the capital gain using this method, the entity subtracts the cost base from the capital
proceeds. An entity must use this method for any shares or units they have bought and sold within
12 months (that is, when the indexation and discount methods do not apply)


Capital loss

In general, an entity makes a capital loss as a result of a CGT event if they sold an asset for less
than the paid for it. The entity‟s capital loss is the difference between their reduced cost base and
their capital proceeds.


Reduced cost base

The reduced cost base is the amount the entity takes into account when they are working out
whether they have made a capital loss when a CGT event happens. The reduced cost base may need
to have amounts deducted from it such as non-assessable payments. The reduced cost base does
not include indexation or interest on monies borrowed.
Capital proceeds

This is the term used to describe the proceeds from a CGT event. This is usually an amount of
money or the value of any property the entity receives (or is entitled to receive) as a result of a CGT
event. For shares or units, capital proceeds may be:

   the amount the entity receives from the purchaser

   the amount the entity receives from a liquidator

   the amount the entity receives on a merger/takeover, or

   the market value if you give them away.


Goods and services tax (GST) related items

The following GST related items are described and explained in the „GST and other taxes‟ chapter
(chapter 12) of Taxation Statistics 2001–02.

   GST

   taxable supply

   input taxed supply

   GST-free supply

   consideration (for GST purposes)

   input tax credit

Further details relating to GST and FBT are contained in Chapter 22 of Fringe benefits tax: A guide
for employers and FBT reform: the interaction between FBT and GST — Fact sheet.


Uniform capital allowance (UCA) system

From 1 July 2001, the UCA system applies to most depreciating assets, including those acquired
before that date. The UCA provisions in Division 40 of the Income Tax Assessment Act 1997 (ITAA
1997) consolidate a range of former capital allowance provisions, including those relating to plant
and equipment. The UCA system does this by providing a set of general rules that apply across a
variety of depreciating assets and certain other capital expenditure. It maintains some concessional
tax treatments, such as those applying to primary production depreciating assets. It also introduces
new deductions for some business-related capital expenditure and for certain project costs that did
not previously attract a deduction.

Taxpayers now calculate deductions for the decline in value of their depreciating assets using these
new rules.

Eligible taxpayers who elect to enter the simplified tax system (STS) will generally calculate
deductions for their depreciating assets under the special STS rules. However, the provisions of the
UCA system relating to deductions for certain capital expenditure, such as project amounts and
business-related costs, apply to STS taxpayers.
Simplified tax system (STS)

From 1 July 2001, the STS applies to assessments for income years starting on or after that date.
The STS is an alternative method of determining taxable income for eligible small businesses with
straightforward financial affairs. The STS provisions can be found in Division 328 of the ITAA 1997.

The STS has three main elements:

   STS cash accounting

   simplified trading stock rules, and

   simplified depreciation (capital allowance) rules.

In addition, STS entities can claim a full deduction for certain prepaid business expenses.

Participation in the STS is optional.

If a taxpayer chooses to participate in the STS, they must use all three elements where they apply.
The STS accounting and the simplified depreciation (capital allowance) rules apply to non-business
income and deductions, as well as to business income and deductions.

A taxpayer is eligible to be an STS taxpayer for an income year if:

   they carry on a business

   they have an STS average turnover of less than $1 million. The STS average turnover includes
    the turnover of any entities the taxpayer is 'grouped with', and

   they, together with any entities they are 'grouped with', have depreciating assets with a total
    adjustable value of less than $3 million at the end of the year (includes depreciating assets for
    which a deduction has been allowed or is allowable under the STS or the UCA provisions).
Income items – companies

Gross payments where ABN not quoted (item 6, label A)

Gross payments made to the company that were subject to withholding because an ABN was not
quoted. Gross payments include amounts of tax withheld.


Other sales of goods and services (or Sales of goods and services) (item 6,
label C)

Gross sales of trading stock, including wool, produce and livestock (including the assessable value of
forced disposal), manufactured goods, goods taken ex-stock, and gross earnings from services.
They exclude sales of shares and land, and payments where tax has been withheld for failure to
quote an ABN.


Gross distribution from partnerships (or Distributions from partnerships) (item 6,
label D)

The distributions received by the company from all partnerships.


Gross distribution from trusts (or Distributions from trusts) (item 6, label E)

The total amount of gross distributions received by the company from trusts.


Gross interest (item 6, label F)

The total interest received from all sources, including interest received from, or credited by, an
associated entity.


Gross rent and other leasing and hiring income (or Gross rents) (item 6, label G)

All income from rents (being income from land and buildings), leasing and hiring.


Gross dividends (item 6, label H)

All franked and unfranked dividends, foreign source dividends, bonus shares, deemed dividends,
liquidators and other company distributions.
Fringe benefit employee contributions (item 6, label I)

All payments the company receives from employees receiving fringe benefits. Fringe benefit
employee contributions form part of the employer‟s or associate‟s assessable income in situations
where employees make payments for fringe benefits they have received.

In general, a fringe benefit is a benefit provided in respect of employment. It includes any right,
privilege, service or facility. Fringe benefits are provided to employees (or associates of the
employees) in place of or in addition to salary or wages, for example, the use of a car for private
purposes.


Assessable government industry payments (item 6, label Q)

Generally, government grants, rebates, benefits, bounties and subsidies are assessable income in
the hands of the recipient if they are received in relation to carrying on a business. This usually
includes payments of a capital nature. Examples of assessable government industry payments
include bounties, diesel fuel rebates, diesel and alternative fuels grant, drought relief, employee
subsidies, export incentive grants, Industry Assistance Grants (including research and development
(R&D) grants), Medicare payments to medical practice companies, and product stewardship (oil)
benefits.


Other gross income (item 6, label R)

Includes royalties, insurance recoveries, bad debt recoveries, life insurance premiums, subsidies,
and non-assessable government assistance from all sources and profit on sale of depreciating
assets(including assets used for R&D purposes). Other gross income excludes any amounts
previously included at the above items.


Total income (item 6, label S)

Total income is the sum of all income items shown at labels A to R above, that is the sum of:

   gross payments where ABN not quoted (item 6, label A)

   other sales of goods and services (or Sales of goods and services) (item 6, label C)

   gross distribution from partnerships (or distributions from partnerships) (item 6, label D)

   gross distribution from trusts (or distributions from trusts) (item 6, label E)

   gross interest (item 6, label F)

   gross rent and other leasing and hiring income (or gross rents) (item 6, label G)

   gross dividends (item 6, label H)

   fringe benefit employee contributions (item 6, label I)

   assessable government industry payments (item 6, label Q), and

   other gross income (item 6, label R).

Note: In the company detailed tables the total income amount reported is the total calculated by
the Tax Office during assessment. It is not necessarily the same as the sum of components as
shown by the taxpayer on their annual income tax return.
Expense items – companies
All expense figures shown at item 6, labels A to S, on the 2002 company tax return are from the
company's financial statements.


Cost of sales (item 6, label A)

The cost of anything produced, manufactured, acquired or purchased for manufacture, sale or
exchange in deriving the gross proceeds or earnings of the business. It includes freight inwards and
may include some external labour costs (item 6, label C).

Note: STS taxpayers follow different rules for calculating this item.

For more information, see page 16 of the of the Company tax return instructions 2002.


Contractor, subcontractor and commission expenses (or External labour costs)
(item 6, label C)

Payments for labour and services provided under contract, other than payments in the nature of
salaries and wages. These expenses include payments to self-employed persons such as consultants
and contractors, and commissions paid to people not receiving a retainer. Other examples include
agency fees, service fees, management fees and consultant fees.

These expenses does not include expenses for external labour which are incorporated with cost of
sales (item 6, label A) and expenses for accounting or legal services.


Employee superannuation (item 6, label D)

The amount of superannuation payments made by employers for the income year. Employers are
entitled to a deduction for contributions made in the income year to a superannuation, provident,
benefit or retirement fund, or retirement savings account, where the contribution is to provide
superannuation benefits for eligible employees or to provide benefits to an employee‟s dependants
on the employee‟s death. The purpose of the contributions must be to make provision for individual
personal benefits, pensions or retiring allowances. The amount of contributions that can be claimed
as a deduction by an employer contributing to a resident complying superannuation fund in respect
of eligible employees is limited by the age of each relevant employee. For the 2001–02 income year
these age based limits are as follows:



Under 35       $11,912

35 to 49       $33,087

50 & over      $82,054
Bad debts (item 6, label E)

Bad debt expenses incurred for the 2001–02 income year. Before a bad debt can be claimed, it must
be more than merely doubtful. Allowable deductions depend on the facts in each case and, where
applicable, the action taken for recovery. For more information on bad debts, see Taxation Ruling TR
92/18.

A deduction can be claimed for:

   partial debt write-offs where only part of a debt is bad and is written off and

   losses incurred in debt for equity swaps for debt written off after 26 February 1992.


Lease expenses within Australia (item 6, label F)

Expenses incurred through both finance and operating leases on leasing plant and equipment,
including motor vehicles, from Australian residents. Lease expenses exclude the cost of leasing real
estate.

Should this also exclude expenses under a hire purchase agreement.


Lease expenses overseas (item 6, label I)

Expenses incurred through both finance and operating leases for leasing plant and equipment,
including motor vehicles, from non-residents. Excludes the cost of leasing real estate and
expenditure on items other than plant and equipment leased from non-residents.


Total lease expenses

The sum of lease expenses within Australia (item 6, label F) and lease expenses overseas (item 6,
label I).


Rent expenses (item 6, label H)

Expenses incurred as a tenant for rental of land and buildings used in producing income.


Interest expenses within Australia (item 6, label V)

The deductible interest incurred on money borrowed from Australian sources.


Interest expenses overseas (item 6, label J)

The deductible interest incurred on money borrowed from overseas sources.


Royalty expenses within Australia (item 6, label W)

The royalty expenses paid during the income year to Australian residents.
Royalty expenses overseas (item 6, label U)

The royalty expenses paid during the income year to non-residents.


Depreciation expenses (item 6, label X)

The company's book depreciation expenses for depreciable assets, excluding profit on sale of
depreciable assets or loss on sale of depreciable assets.

For STS taxpayers, this item includes depreciation deductions being claimed under the STS
depreciation (capital allowance) rules and for the business use of other assets under the uniform
capital allowance (UCA) rules.

STS taxpayers can claim an immediate deduction for depreciating assets costing less than $1000
(excluding input tax credit entitlements) and pool most of their other depreciating assets. There are
two STS pools:

   a general STS pool for depreciating assets with an effective life of less than 25 years, and

   a long-life STS pool for depreciating assets with an effective life of 25 years or more.

For more information, see pages 19–21 of the Company tax return instructions 2002.

Once calculated by the taxpayer, the amounts claimed for STS low cost assets, general STS pool and
long life STS pool deductions are added together and included in the total for depreciation expenses
(item 6, label X). The separate low-cost and pool amounts are also recorded on the company tax
return at:

•      STS depreciation deduction – Low cost assets (item 9 label A)

•      STS depreciation deduction – General pool assets (item 9 label B)

•      STS depreciation deduction – Long life pool assets (item 9 label C)


Motor vehicle expenses (item 6, label Y)

Motor vehicle running expenses incurred by the company in deriving assessable income. They
include fuel, repairs, registration fees and insurance premiums, but exclude depreciation expenses
(item 6, label X), total lease expenses and interest expenses – within Australia (item 6, label V) and
overseas (item 6, label J).

A motor vehicle for the purposes of this label is a motor car, station wagon, panel van, utility truck
designed to carry less than one tonne or other road vehicle designed to carry a load of less than one
tonne or fewer than nine passengers. This excludes motorcycles and four-wheeled motor cycle of the
sort used on farms.


Repairs and maintenance (item 6, label Z)

Expenditure incurred on repairs and maintenance of plant, machinery, implements and premises.
For more information on the nature of repairs, see the Company tax return instructions 2002.


All other expenses (or Other expenses) (item 6, label S)

Those expenses incurred by the company for the 2001–02 income year which have not been
included previously at item 6, labels A to Z above.
Total expenses (item 6, label Q)

The sum of the following expense items:

   cost of sales (item 6, label A)

   contractor, subcontractor and commission expenses (or External labour costs) (item 6, label C)

   employee superannuation (item 6, label D)

   bad debts (item 6, label E)

   lease expenses within Australia (item 6, label F)

   lease expenses overseas (item 6, label I)

   rent expenses (item 6, label H)

   interest expenses within Australia (item 6, label V)

   interest expenses overseas (item 6, label J)

   royalty expenses within Australia (item 6, label W)

   royalty expenses overseas (item 6, label U)

   depreciation expenses (item 6, label X)

   motor vehicle expenses (item 6, label Y)

   repairs and maintenance (item 6, label Z), and

   all other expenses (or Other expenses) (item 6, label S).

Note: In the company detailed tables the total expenses amount reported is the total calculated by
the Tax Office during assessment. It is not necessarily the same as the sum of components as
shown by the taxpayer on their annual income tax return.
Profit and loss information items – companies

Operating profit or loss (item 6, label R)

The result of total income (item 6, label S) less total expenses (item 6, label Q)


Extraordinary revenue or expenses (or Extraordinary items) (item 6, label N)

Revenue and expenses (or gains and losses) from events outside the ordinary operations of the
company and not of a recurring nature.


Total profit or loss (item 6, label T)

The result of operating profit or loss (item 6, label R) plus or minus extraordinary revenue or
expenses (item 6, label N).
Reconciliation to taxable income or loss items – companies
Note: STS taxpayers follow different rules for calculating reconciliation items.

For more information, see pages 22–23 of the Company tax return instructions 2002.


Net capital gain (item 7, label A)

Net capital gain is the company‟s total capital gain for the income year, reduced by current year
capital losses, prior year net capital losses, and any other relevant small business concessions, such
as the 50% active asset reduction, the retirement exemption and the rollover relief. For more
information on how to calculate a company‟s net capital gain, see the Guide to capital gains tax
2001–02.


Non-deductible exempt income expenditure (item 7, label U)

Any expenditure incurred in deriving exempt income (item 7, label V) under the provisions of the
Income Tax Assessment Act 1936 (ITAA 1936), such as foreign branch income, foreign branch
capital gains and non-portfolio dividends from foreign countries. It excludes expenditure incurred in
deriving exempt income from retirement savings accounts.


Other assessable income (item 7, label B)

Generally includes amounts that are not included as income in the profit and loss statement, but
which form part of assessable income. For example, attributed foreign income of a controlled foreign
company and timing adjustments, such as that which reconciles interest receivable to assessable
interest income. Other assessable income excludes capital gains.


Non-deductible expenses (item 7, label W)

Include expense-related adjustments that have to be added back to total profit or loss (item 6,
label T) to reconcile with the taxable income or loss (item 7, label T) amount. Generally, this
includes amounts that are an expense for accounting purposes, but not deductible for income tax
purposes, including timing variations. Examples are overseas interest disallowed under the thin
capitalisation or debt creation provisions, and losses on the sale of fixed assets included in the
accounts.
R&D accounting expenditure claimed under R&D concession (item 7, label D)

The expense amounts included at the appropriate labels in item 6 – calculation of total profit or loss,
which relate to amounts that are subject to the R&D tax concession provisions. R&D concessions
include:

   An accelerated rate of deduction for wages, salaries, other labour costs and expenditure incurred
    directly on R&D activities (subject to a $20,000 threshold).

   An expenditure incurred in obtaining the rights to pre-existing “core technology”.

   An expenditure on R&D plant after 29 January 2001 entitles the company to effective life
    depreciation of 125%.

   A 100% deduction on R&D buildings, spread over a 40 year period.

   Increasing the level of R&D expenditure.

   Small companies can get a refundable tax offset that is equal to the value of the R&D deduction.


Section 46FA deduction for flow-on dividends (item 7, label C)

Any amounts that were claimed as deductions in 2001-02 under section 46FA of the Income Tax
Assessment Act 1936 (ITAA 1936). In certain cases this deduction is allowable for an on-payment of
unfranked non-portfolio dividends by a resident company to its non-resident parent.


Deduction for decline in value of depreciating assets (Or Depreciation deducted)
(item 7, label F)

The amount of deductions for decline in value for tax purposes of depreciating non-R&D assets. An
amount of deductions for the decline in value for tax purposes for a unit of plant owned or quasi-
owned by the taxpayer during the income year, and used or installed ready for use for the purpose
of producing assessable income. For more information on depreciation, see the Guide to depreciating
assets.


Immediate deduction for capital expenditure (or Immediate write-off – mining
and quarrying companies ONLY) (item 7, label E)

This relates specifically to the mining, petroleum and quarrying industries. It includes such items as
exploration expenditure, payments of petroleum resource rent tax and rehabilitation expenditures
deductible under Division 330 of the Income Tax Assessment Act 1997 (ITAA 1997), and any
immediate (and allowable) deductions arising under Subdivision 330-J of the ITAA 1997 (balancing
adjustment).
Deduction for Project Pool (item 7, label H)

This is a new deduction to allow a special tax write-off for certain capital expenditure (such as the
cost of feasibility studies) directly related to a commercial project. Any such capital expenditure is
added together or „pooled‟ and can generally be claimed over the life of the project – once the
project has started.

Such capital expenditure – known as „project amount‟ – is expenditure incurred on:
    creating or upgrading community infrastructure associated with the project
    site preparation for depreciating assets (other than to drain swamps or low-lying land or to
      clear land for horticultural plants and grapevines)
    feasibility studies for the project
    environmental assessments for the project
    obtaining information associated with the project
    seeking to obtain a right to intellectual property
    ornamental trees or shrubs

For more information, see page 27 of the Company tax return instructions 2002


Capital works deductions (item 7, label I)

The deduction claimed for capital expenditure on special buildings, which includes eligible capital
expenditure on extensions, alterations or improvements. It excludes expenditure for mining
infrastructure buildings and timber milling buildings.


Section 40-880 deduction (item 7, label Z)

The uniform capital allowance (UCA) system provides a deduction for some capital expenditure that
was not previously deductible.

Certain business related costs incurred after 30 June 2001 are now deductible under section 40-880
of ITAA 1997 to the extent that the business is or was carried on for a taxable purpose, such as for
producing assessable income. The costs must not be deductible under another provision of the tax
law or form part of the cost of a depreciating asset or of land.

The following types of business related expenditure may now qualify for deduction:

   business establishment costs

   business restructuring costs

   business equity raising costs

   costs of defending the company‟s business against a takeover

   costs to the business of unsuccessfully attempting a takeover

   costs of liquidating a company that carried on a business and of which you are a shareholder,
    and

   costs of ceasing to carry on the business.
Drought investment allowance (item 7, label J)

The drought investment allowance provides a deduction of 10% of expenditure on the cost of
acquisition or construction by the company on new items of drought mitigation property incurred
after 23 March 1995 and before 1 July 2000.

Drought mitigation property includes: fodder storage facilities, livestock drinking water storage
facilities, water transport facilities equipment and minimum tillage equipment.

Eligibility criteria for this allowance are listed on page 28 of the Company tax return instructions
2002.


Development allowance (item 7, label K)

Development allowance is available only to those companies or partnerships that applied to the
Development Allowance Authority before 31 December 1992 and received a pre-qualification
certificate.


R&D concession claim (100%, 125%, not 50% increment) (or Non-syndicated
research and development – IRDB registrants ONLY) (item 7, label L)

To complete and claim R&D concession claim at label L, companies are required to meet the annual
registration requirements under the Industry, Research and Development Act 1986. Companies
choosing to claim the R&D tax offset can only do so at the time of lodgment of their tax returns and
must be registered at that time. Companies claiming an R&D tax concession amount are required to
complete the Research and development tax concession schedule. For more information see new
schedules on page 1 and the Research and development tax concession schedule instructions 2002.


R&D incremental concession – additional 50% increment or (Syndicated research
and development) (item 7, label M)

The amount of R&D increment claim calculated at label M – R&D incremental concession in part D,
item 2 of the Research and development tax concession schedule.


Landcare operations and deduction for decline in value of water facility (or
Landcare operations and water conservation/conveying expenses) (or Land
degradation expenses) (item 7, label N)

Deductions claimed for landcare operations and water facilities.
Landcare operations expenses

Landcare operations cover what were previously known as land degradation measures. A company
can claim a deduction in the year it incurs capital expenditure on landcare measures for land in
Australia, providing it is incurred in the following operations:

   eradicating or exterminating animal pests from the land

   destroying weed or plant growth detrimental to the land

   preventing of combating land degradation other than by the use of fences

   erecting fences to keep out livestock or vermin from areas affected by land degradation to
    prevent or limit further damage and assist in reclaiming the areas

   erecting fences to separate different land classes in accordance with an approved land
    management plan

   constructing levee banks or similar improvements, and

   constructing surface or sub-surface drainage works – other than the draining of swamps or low-
    lying areas – to control salinity or assist in drainage control.

However, the deduction for landcare operations expenses is reduced when the land is not used
wholly for either:

   a primary production business, or

   a business for the purpose of producing assessable income from the use of rural land – except a
    business of mining or quarrying.

Water facilities

Capital expenditure incurred on water storage and farm reticulation systems is deductible if incurred
primarily and principally in carrying on a primary production business on land in Australia. The
expenditure can be deducted in equal instalments over 3 years. The amount of water facilities
expenses shown at item 7, label N on the return is therefore one-third of the capital expenditure.
Items include dams, earth tanks, underground tanks, concrete or metal tanks, tank stands, bores,
wells, irrigation channels or similar improvements, pipes, pumps, water towers, windmills and
extensions or improvements to any of these items. The cost of constructing a power line from an
existing mains electricity connection to any plant used for conserving or conveying water is also
included.

However, the deduction for facilities to conserve or convey water is reduced where the facility is not
used wholly for either:

   carrying on a primary production business on land in Australia, or

   for the purpose of producing assessable income.
Deduction for environmental protection expenses (or Environmental impact
assessment and protection expenses) (or Environmental protection expenses)
(item 7, label O)

Companies can deduct expenditure to the extent that it incurs it for the sole or dominant purpose of
carrying on environmental protection activities (EPA). EPA are activities that are undertaken to
prevent, fight or remedy pollution or to treat, clean up, remove or store waste from the company‟s
earning activity. The company‟s earning activity is one it carried on, carries on or proposes to carry
on for the purpose of:

   producing assessable income (other than a net capital gain)

   exploration or prospecting, or

   mining site rehabilitation.

Companies may also claim a deduction for cleaning up a site on which a predecessor carried on
substantially the same business provision.


Offshore banking unit adjustment (item 7, label P)

This label refers only to companies that have been declared to be an offshore banking unit by the
Treasurer under subsection 128A11(2) of the Income Tax Assessment Act 1936 (ITAA 1936). The
income (other than capital gains) derived by an offshore banking unit from offshore banking
activities is taxed at an effective rate of 10%. The other income and capital gains of an offshore
banking unit are taxed at normal company rates. Information on how to calculate offshore banking
unit adjustment amounts are explained on pages 30–32 of the Company tax return instructions
2002.


Exempt income (item 7, label V)

All income exempt from Australian tax. This includes income that may, subject to certain conditions,
be exempt under section 23AH of the Income Tax Assessment Act 1936 (ITAA 1936) (foreign branch
income and foreign branch capital gains) and section 23AJ of the ITAA 1936 (non-portfolio dividends
from foreign countries). These provisions aim to relieve from double taxation amounts already taxed
under the CFC transferor trust and foreign investment fund regimes.


Other income not included in assessable income (item 7, label Q)

Generally, amounts included at this label are items that are income for accounting purposes, but not
assessable for income tax purposes, for example, non-taxable offshore banking unit income and
profit on the sale of fixed or other assets included in accounts.


Other deductible expenses (item 7, label X)

Generally other deductible expenses are amounts such as timing differences, that are an allowable
deduction for income tax purposes, but are not shown in the accounts or specifically shown
elsewhere on the tax return (labels C to V above). Examples of items included are deductible
balancing adjustments (loss on the disposal of depreciated plant), film licensed investment company
deductions, incentive deductions for investment in Australian films, and capital allowances for
primary producers.
Tax losses deducted (item 7, label R) (or Losses recouped)

This label shows only tax loss(es) of a prior income year deducted during the 2001–02 income year
under section 36-15 of the Income Tax Assessment Act 1997. Subject to various rules, a prior year
tax loss is deducted in a later income year in the order in which it was incurred – to the extent that
it has not already been deducted. For more information, see the Company tax return instructions
2002.


Tax losses transferred in (item 7, label S)

The amount of tax losses transferred to the company from group companies under Subdivision 170-
A of the Income Tax Assessment Act 1997. A group company may transfer the whole or a part of a
tax loss to another group company where the conditions laid down in the subdivision are satisfied.
Losses transferred in can never be used to create a tax loss.


Election to take R&D tax offset (item 7, label Y)

The amount of R&D increment claim calculated at label Y – R&D claim subject to the R&D tax offset
in part E, item 2 of the Research and development tax concession schedule.


Taxable income or loss (item 7, label T)

All assessable income less allowable deductions, which equals total profit or loss (item 6, label T)
plus or minus the reconciliation adjustments in the reconciliation statement (item 7). When the
company has a taxable income of $1 or more, it transfers the amount reported at this label to
taxable or net income (label A) in the Calculation statement on page 4 of the 2002 company tax
return.
Financial and other information – companies

13 month prepaid expenses

The rules that allow immediate deductibility for expenditure incurred in respect of things to be done
within 13 months of the expenditure being incurred have changed. For many businesses, the
deduction for most prepaid expenditure incurred after 11:45 a.m. AEST on 21 September 1999 can
now be deducted in an income year only to the extent the expense relates to that income year.


Initial year 13 month prepaid expenses (item 8, label X)

This is the part of the prepaid expenditure that relates to later income year, including 21 September
1999. For more information on prepaid expenses see page 36–37 Company tax return instructions
2002.


Later year 13 month prepaid expenses (item 8, label Y)

This is the part of the company‟s prepaid expenses incurred in the 2001–02 income year that relates
to a later year and which is affected by the 21 September 1999 changes. It is the difference
between the expenditure and the part that relates to things to be done within the 2001–02 income
year. See Deductions for prepaid expenses for a detailed explanation of how the later year amount
is calculated.

Under a new measure taking effect from 1 July 2001 (the debt/equity rules), certain interests, which
are not shares in legal form are treated in a similar way to shares for some tax law purposes. These
interests are called „non share equity interests‟ and include some income securities, and some
stapled securities. See the Guide to debt and equity tests for more information.


Opening stock (item 8, label A)

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 has been prepared. This amount includes motor vehicle floor plan
stock and work in progress of manufactured goods, but excludes any amount that represents
opening stock of a business that commenced operations during the income year.

The opening value of an item of stock must equal its closing value in the previous income year.


Purchases and other costs (item 8, label S)

The cost of direct materials used for manufacture, sale or exchange in deriving the gross proceeds
or earnings of the business.

Note: STS taxpayers follow different rules for calculating reconciliation items.

For more information, see page 38 of the Company tax return instructions 2002.
Closing stock (item 8, label B)

The total value of all trading stock on hand at the end of the income year or accounting period for
which the company tax return has been prepared. It includes floor plan stock and work in progress
of manufactured goods, but excludes any amount that represents closing stock of a business that
ceased operations during the income year.

Note: STS taxpayers follow different rules for calculating reconciliation items.

For more information, see page 38 of the Company tax return instructions 2002.


Trade debtors (item 8, label C)

The total amounts owing to the company at year end for goods and services provided during the
income year – that is, current trade debtors.

Note: STS taxpayers do not need to complete this label.


All current assets (or Current assets) (item 8, label D)

All assets of the company, including all current assets, other debtors and fixed, tangible and
intangible assets. All current assets also include cash on hand, accounts receivable, short-term bills
receivable, inventories, cash at bank and the trade debtors amount (item 8, label C).


Total assets (item 8, label E)

All assets of the company, including current, fixed, tangible and intangible assets. Total assets also
include all current assets (item 8, label D).


Trade creditors (item 8, label F)

The total amounts owed by the company at year end for goods and services provided during the
income year – that is, current trade creditors.

Note: STS taxpayers do not need to complete this label.


All current liabilities (or Current liabilities) (item 8, label G)

The total obligations payable by the company within the coming income year. All current liabilities
also include trade creditors (item 8, label F).


Total liabilities (item 8, label H)

All liabilities of the company, including other creditors and deferred liabilities such as loans secured
by mortgage and long-term loans. Total liabilities also include all current liabilities (item 8, label G).
Total debt (item 8, label J)

The average total debt of the company for the 2001–02 income year. The average total debt is
calculated by adding the opening and closing balances of the company‟s total debt for the income
year, then dividing this sum by two. The total debt of a company includes all financial instruments
and arrangements that were used to provide funds for operations and investments. The instruments
and arrangements that are included in the total debt amount include all loans, securities and
instruments that give rise to deductible finance expenses which include any of the following:

   interest, a payment in the nature of interest, or a payment in substitution for interest

   payments made for assignments(s) of the right to interest

   a discount on a security in relation to a finance arrangement

   an amount that is taken under a law to be an amount of interest in respect of a lease, a hire
    purchase arrangement or any other financial instrument specified by law

   any application or processing fee in respect of a finance arrangement

   any finance expense in respect of a repurchase agreement or securities lending arrangement

   any other form of yield associated with a finance arrangement, and

   any such amount that, is instead of being paid to a party to the arrangement, is dealt with in any
    way on behalf of that party.


Commercial debt forgiveness (item 8, label K)

The net amount of commercial debts owed by the company that were forgiven during the 2001–02
income year. 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.


Shareholders’ funds (item 8, label R)

The net shareholders‟ funds as per accounting records. The amount shown at this label should equal
total assets (item 8, label E) less total liabilities (item 8, label H).


Franked dividends paid (or Dividends franked) (item 8, label J)

The amount of fully franked dividends paid or credited during the 2001–02 income year.


Unfranked dividends paid (or Dividends unfranked) (item 8, label K)

The amounts deemed to be dividends by various sections of the Income Tax Assessment Act 1936
(ITAA 1936) and ITAA 1997. Under Division 7A, Part III, of the ITAA 1936, payments and loans
(unless they come within specified exclusions) by a private company to a shareholder and their
associate are treated as assessable dividends to the extent of the distributable surplus (includes
realised and unrealised profit). In addition, debts owed by a shareholder or associate that are
forgiven by a private company are treated as dividends.
Total dividends

This is the sum of franked (item 8, label J) and unfranked dividends (item 8, label K) paid. It is NOT
equal to gross dividends (item 6, label H)


Class C franking account balance (item 8, label M)

The balance of the class C franking account at the end of the 2001–02 franking year, unless it is a
deficit balance. The class C franking account shows the balance of unpaid dividends in respect of
which tax has already been paid.


Balance of unfranked non-portfolio dividend account at year end (item 8, label L)

Companies making a claim under section 46FA of the Income Tax Assessment Act 1936 are required
to maintain an unfranked non-portfolio dividend account. The amount reported at this label is the
balance of this account at the last day of the income year.


Loans to shareholders and their associates (item 8, label N)

The net sum of debit loan account balances of all such loan accounts for shareholders or other
associates at the end of the financial year.

This is relevant only to privately owned companies that had a loan account to a shareholder or an
associate that had a debit balance at any time during the financial year, and the recipient of the loan
was a natural person.


Depreciable assets purchased

The cost, for income tax depreciation purposes, of all depreciable assets (other than buildings) first
depreciated during the income year. It includes purchases of plant and equipment for approved R&D
projects. It excludes purchases of buildings used to produce assessable income, purchases of
buildings used for approved R&D projects, and purchases of assets used to produce exempt income.

This item was replaced on 1 July 2001 by two new items: intangible depreciating assets first
deducted (item P15, label I) and other depreciating assets first deducted (item P16 label J). As a
result, depreciable assets purchased statistics are not available from the 2001–02 income year
onwards


Depreciable assets sold

The amount of each depreciable asset sold, lost or destroyed during the income year. The amount
shown at this label is the lesser of the written-down value at the date of disposal or the amount
received. It includes the sale of plant and equipment for approved R&D projects. It excludes the
sales of buildings used to produce assessable income, sales of buildings used for approved R&D
projects, and sales of assets used to produce exempt income. This label is no longer shown on the
company return form 2002.

This item was replaced on 1 July 2001 by two new items: termination value of intangible
depreciating assets (item P17, label D) and termination value of other depreciating assets (item P
18, label K). As a result, depreciable assets sold statistics are not available from the 2001–02
income year onwards.
Intangible depreciating assets first deducted (item 8, label Z)

The termination value of each balancing adjustment event occurring for intangible depreciating
assets (including pooled assets). A balancing adjustment event occurs if the taxpayer stops holding
or using a depreciating asset or decides not to use it in the future, that is, the assets were sold, lost
or destroyed.

Generally the termination value is the amount the taxpayer receives in relation to the balancing
adjustment event. It includes the market value of any non-cash benefits such as goods and services
the taxpayer receives for the asset.

Intangible assets regarded as depreciating assets (as long as they are not trading stock) include:

   certain items of intellectual property (patents, registered designs, copyrights and licences of
    these)

   computer software (or a right to use computer software) that the taxpayer acquires, develops or
    has someone else develop for the taxpayer‟s use for the purposes for which it is designed (in-
    house software)

   mining, quarrying or prospecting rights and information

   spectrum licences

   datacasting transmitter licences, and

   certain indefeasible rights to use international submarine cable systems (IRUs).

For more information, see page 41 of the Company tax return instructions 2002.


Other depreciating assets first deducted (item 8, label A)

Includes the cost of all depreciating assets (other than intangible depreciating assets) for which the
taxpayer is claiming a business deduction for the decline in value for the first time.

For more information, see page 41 of the Company tax return instructions 2002.


Termination value of intangible depreciating assets (item 8, label P)

The termination value of each balancing adjustment event occurring for intangible depreciating
assets (including pooled assets). A balancing adjustment event occurs if the taxpayer stops holding
or using a depreciating asset or decides not to use it in the future, that is, the assets were sold, lost
or destroyed.

Generally the termination value is the amount the taxpayer receives in relation to the balancing
adjustment event. It includes the market value of any non-cash benefits such as goods and services
the taxpayer receives for the asset.
Intangible assets regarded as depreciating assets (as long as they are not trading stock) include:

   certain items of intellectual property (patents, registered designs, copyrights and licences of
    these)

   computer software (or a right to use computer software) that the taxpayer acquires, develops or
    has someone else develop for the taxpayer‟s use for the purposes for which it is designed (in-
    house software)

   mining, quarrying or prospecting rights and information

   spectrum licences

   datacasting transmitter licences, and

   certain indefeasible rights to use international submarine cable systems (IRUs).

For more information, see page 41–42 of the Company tax return instructions 2002.


Termination value of Termination value of other depreciating assets (item 8, label
E)

The termination value of each balancing adjustment event occurring for intangible depreciating
assets (including pooled assets). A balancing adjustment event occurs if the taxpayer stops holding
or using a depreciating asset or decides not to use it in the future i.e. the assets were sold, lost or
destroyed.

Generally the termination value is the amount the taxpayer receives in relation to the balancing
adjustment event. It includes the market value of any non-cash benefits such as goods and services
the taxpayer receives for the asset.

Other depreciating assets are those other than intangible depreciating assets.

For more information, see page 42 of the Company tax return instructions 2002.


Total salary and wage expenses (item 8, label D)

The total salary, wages and other labour costs incurred by the company, including directors
remuneration (as per payment summaries). It also includes any salaries and wages component of
cost of sales (item 6, label A), such as allowances, bonuses, casual labour payments, retainers and
commissions paid to people who receive a retainer, and workers‟ compensation paid through the
payroll. Also includes direct and indirect labour costs, directors fees, holiday pay, locums, long
service leave, lump sum payments, other employee benefits, overtime, payments under an incentive
or profit-sharing scheme, retiring allowances and sick pay. Any salary and wages paid to an
associated person, principal or sole agent or related party are also included here.

However, these expenses exclude agency fees, contract payments, sub-contract payments, service
fees, superannuation, reimbursements or allowances for travel, management fees, consultant fees
and wages or salaries reimbursed under a government program.


Payments to associated persons (or Payments to related entities) (item 8,
label Q)

Amounts such as salaries, wages, commissions, superannuation contributions or allowances paid by
private companies to related persons. Also includes amounts of salaries and wages paid to related
persons declared as current assets (item 8, label D).
Net foreign income (item 8, label R)

The assessable income derived by companies from foreign sources, net of expenses. This amount
includes foreign source capital gains – after offsetting any unapplied capital losses – but excludes
attributed foreign income. Foreign source losses are offset only against foreign source income. Any
excess of foreign source losses over foreign source income may be carried forward to be offset
against future foreign source income of the same class. For more information, see the Foreign
income return form guide.


Tax spared foreign tax credits (item 8, label S)

The amount of foreign tax credit relating to foreign tax forgone under an investment incentive
scheme provided by a foreign government, where that tax forgone is deemed to have been paid for
the purposes of Australia‟s foreign tax credit system.


Attributed foreign income (AFI) (item 8, labels B, C, U, V, W and X)

AFI–Broad-exemption listed country (item 8, label B)

The amount of gross attributed foreign income from controlled foreign entities in broad-exemption
listed countries. Broad exemption listed countries are listed in Part 1 of Schedule 10 of the Income
Tax Regulations.

AFI–Limited-exemption listed country (item 8, label C)

The amount of net attributed foreign income from controlled foreign entities in limited-exemption
listed countries. Limited-exemption listed countries are listed in Part 2 of Schedule 10 of the Income
Tax Regulations.

AFI–Unlisted country (item 8, label U)

The amount of net attributed foreign income from controlled foreign entities in unlisted countries.
Unlisted countries are countries that are not listed in Schedule 10 of the Income Tax Regulations.

AFI–Transferor trust (item 8, label V)

The amount of net attributed foreign income from transferor trusts.

AFI–Foreign investment fund income (FIF income) (item 8, label W)

The amount of net attributed foreign income from foreign investment funds.

AFI–Foreign life policy (FLP) (item 8, label X)

The amount of net attributed foreign income from foreign life policies.

Foreign currency exchange gains or losses of a capital nature (or Foreign exchange profit
or loss) (item 8, label I)

The amount of foreign exchange gains and losses of a capital nature realised for borrowings or
loans, delayed payments for acquisition of assets, delayed receipts for sales of assets, and
instalment purchase arrangements.

Section 128F exempt interest paid (item 8, label O)

The amount of interest that was paid to non-residents and is exempt from interest withholding tax
under section 128F of the Income Tax Assessment Act 1936.
STS Depreciation deduction – Low cost assets (less than $1,000) (item 9, label A)

This is the total amount the company claimed at item 6, label X relating to low-cost assets.

For more information, see pages 19 and 44 of the Company tax return instructions 2002.


STS Depreciation deduction – General pool assets (less than 25 years) (item 9,
label B)

This is the total amount the company claimed at item 6, label X relating to the general STS pool.

For more information, see pages 19 and 44 of the Company tax return instructions 2002.


STS Depreciation deduction – Long life pool assets (25 years or more) (item 9,
label C)

This is the total amount the company claimed at item 6, label X relating to the long life STS pool.

For more information, see pages 19 and 44 of the Company tax return instructions 2002.
Losses information and tax offsets – companies

Tax losses carried forward to later income years (or Tax losses carried forward)
(item 10, label U)

The undeducted or not transferred amount of tax losses incurred by the company and carried
forward to the 2002–03 income year under section 36-15 of the Income Tax Assessment Act 1997.


Net capital losses carried forward to later income years (or Net capital losses
carried forward) (item 10, label V)

The total of any unapplied net capital losses from collectables and unapplied net capital losses from
all other CGT assets and events. For more information, see the Guide to capital gains tax 2001–02.


Landcare and water facility tax offset (item 16)

The company cannot choose a tax offset for expenditure incurred after the 2000-01 income year on
landcare operations or water facilities. If the company has chosen to take the water facility tax
offset for capital expenditure incurred in the 1999-2000 or the 2000-01 income year, a tax offset is
available in this income year. Additionally, any landcare or water facility tax offset brought forward
is available for offset.

Water facility tax offset claimed (item 16, label L)

The amount of any water facility tax offset a company is entitled to in the 1999-2000 and 2000-01
income years for capital expenditure incurred in those years and which is available for offset this
income year. This is equal to one–third of the relevant expenditure. It is applied at a rate of 30%.

Landcare and water facility tax offset brought forward from prior years (item 16, label K)

The amount of landcare and water facility tax offset brought forward from prior years and available
to the company. This applies only if the company‟s income tax liability from prior years did not
absorb all of the landcare and water facility tax offset. Any brought forward tax offset available to a
taxpayer is shown on the previous year‟s tax return. The brought forward tax offset must first be
reduced against net exempt income, including any exempt foreign income. Every dollar of net
exempt income reduces the brought forward tax offset by 30 cents.
Calculation statement items – companies

Taxable income or net income (label A)

If a company is a resident, taxable income equals assessable income derived from all sources less
allowable deductions incurred in gaining that income. If the company is a non-resident, taxable
income equals assessable income derived from sources within Australia, plus income that is included
on some basis other than having an Australian source, less allowable deductions incurred in gaining
that income. Taxable income takes into account any concessions or adjustments allowable for
income tax purposes.

The taxable income or net income amount is equal to the taxable income or loss (item 7, label T)
amount as long as the taxable income or loss amount is $1 or more. If the taxable income or loss
amount is $0 or less (that is, the company has no taxable income or has a taxation loss) the taxable
income or net income of the company is equal to $0.


Foreign tax credits (label D)

Foreign tax credits may be allowable in respect of foreign tax paid by the company on foreign
income where the conditions in section 160AF the Income Tax Assessment Act 1936 are satisfied.
Where the conditions are satisfied, a company may be entitled to a credit of the lesser of the foreign
tax paid (reduced by any foreign relief) or the Australian tax payable in respect of the foreign
income.


Franking deficit tax offset (label E)

The lesser of the amount of the franking deficit tax the company paid, less any part which has been
previously applied, or the amount of company tax assessed, less any allowable foreign tax credits
(label D).


Deficit deferral tax offset (label F)

The deficit deferral tax paid by the company that is offset against any remaining tax assessed for
the income year.


Non-refundable tax offsets and credits (or Total of labels D/E/F) (label G)

This is the sum of foreign tax credits (label D) franking deficit tax offsets (label E) deficit deferral tax
offsets (label F). The sum of these credit and tax offset amounts are not refundable, they can only
reduce tax assessed.


Gross tax (label B)

(Note: Statistics for this item is not reported in the company detailed tables.)

The amount of tax payable before the allowance of any rebates/tax offsets (label C) credits or
franking deficit tax offsets (label E).
Rebates/tax offsets (label C)

(Note: Statistics for this item is not reported in the company detailed tables.)

The total of actual rebates/tax offsets available – in dollars and cents – and not the amounts giving
rise to the tax offset. These rebates/tax offsets are not refundable nor can they be carried forward –
they can only be offset against gross tax. (The rebates/tax offsets amount cannot be greater than
the gross tax amount. If it is, the amount is reduced to equal gross tax.)

Tax offsets include:

   tax offsets available under section 46 of the Income Tax Assessment Act 1936. (From 1 July
    2000, no tax offset is allowed for an unfranked dividend unless the dividend is paid within a
    wholly owned company group.)

   tax offsets for bonuses and certain other amounts received under short-term life insurance
    policies taken out after 27 August 1982

   tax offsets for interest on certain government and semi-government securities

   tax offsets on approved heritage conservation expenditure

   tax offsets to approved resident lenders for infrastructure borrowings

   tax offsets for water facilities, and

   refund of excess of imputation credits for dividends paid before 1 July 2001.


Tax assessed

Gross tax (label B) less rebates/tax offsets (label C).


Net tax (tax payable)

Net tax or tax payable is derived from the amount of tax assessed less non-refundable tax offsets
and credits (or Total of labels D/E/F).


Instalments paid (label T)

Any amounts already paid or payable for the current year tax liability, including pay as you go
(PAYG) instalments and any interim payments.
Credit for interest on early payments – amount of interest (or Credit for interest
on early payments) (label V)

Calculated interest amount for early payment. Early interest payment is calculated from the date the
early payment is made to the date the amount becomes due and payable. Interest is payable only
where the tax is actually paid more than 14 days before the due date of payment. Amounts that
may attract early payment interest credit are payments of:

   income tax

   instalments of company tax under section 221AZK of the Income Tax Assessment Act 1936
    (ITAA 1936)

   additional tax under Part VII of the ITAA 1936, and

   late lodgment penalties under section 163A of the ITAA 1936.


Credit for tax withheld where ABN not quoted (label W)

The total amount of tax withheld from payments subject to withholding where an ABN was not
quoted.


Tax withheld from interest/investments (label Y)

Amounts withheld from investments by a financial institution because the payee has not provided a
tax file number or ABN.


Other refundable credits including R&D tax offset (label Z)

Other refundable credits include:

   any R&D tax offset

   the company‟s share of credit from a partnership or trust for tax withheld where an ABN was not
    quoted, and

   franking tax offsets (including venture capital franking tax offsets) of life insurance companies,
    and excess imputation credits relating to dividends paid on or after 1 July 2001 to organisations
    entitled to claim a refund of excess imputation credits.


Total refundable credits (or Total of labels T/V/W/Y/Z) (label R)

The sum of instalments paid (label T), credit for interest on early payments (label V), credit for tax
withheld where ABN not quoted (label W), tax withheld from interest/investments (label Y) and
other refundable credits (label Z).


Section 102AAM interest (label H)

Any distribution from a non-resident trust. Section 102AAM of the Income Tax Assessment Act 1936
imposes an interest charge on certain distributions from non-resident trusts. Refer to Chapter 2 of
the Tax Office publication, Foreign income return form guide.
Balance payable/refundable (or Tax payable/refundable) (label S)

The balance of tax that is owing or refundable. This is the sum of tax payable (or net tax payable)
and Section 102AAM interest (label H) less total refundable credits (label R).
Capital gains tax (CGT) schedule items – companies
Some company tax detailed tables in Taxation statistics 2001–02 reports statistics on some items
reported in the CGT schedule. These items are described below.

Note: Statistics for the schedule items for income years before 2001-02 were sourced from past
company tax returns (see company tax detailed table 7). Please refer to the glossary of past editions
of Taxation statistics or past editions of the company tax return instructions for the definition of the
CGT schedule items below for income years prior to 2001–02.

Statistics for the 2001-02 income year were sourced from the 2002 capital gains tax (CGT)
schedule. Not all companies are required to complete and attach a CGT schedule to their company
returns. Hence, the 2001–02 CGT schedule items statistics reported in the company tax detailed
tables only refer to/represent companies that completed the schedule and whose schedules have
been processed as at 31 October 2003.

For more information on the CGT schedule and entities (including companies) who are required to
complete the schedule, please refer to the link to the 2002 Guide to Capital gains tax within the
Taxation statistics 2001–02:Glossaries on the Tax Office website.


Total current year capital gains (or total capital gains)

An entity (for example, a company) makes a capital gain (or profit) as a result of a CGT event, for
example when an entity sells an asset for more than they paid for it. An entity can also make a
capital gain if a managed fund or other unit trust distributes a capital gain to the entity.

Total current year capital gains includes all the capital gains the entity made from shares and units,
real estate, other CGT assets and any other CGT events and the net capital gains an entity made
from collectables. The capital gains may have been calculated using the indexation method, discount
method and other method. The amount reported in the company tax detailed table is the sum of the
capital gains calculated by the company taxpayer using the indexation method, discount method and
other method (that is, the sum of Part A, labels V, W, X).

Net capital gains from collectables are the total current year capital gains (calculated by using
the indexation, discount or other methods) an entity makes from collectables less any current year
capital losses from collectables and any prior year net capital losses from collectables.

(Please refer to the Tax Office publication, Guide to capital gains tax 2001–02 for a full description of
the methods and how total current year capital gains is calculated.)


Total capital losses of current year applied (or Current year capital losses applied)
(part D, label H)

In general, an entity (for example, a company) makes a capital loss as a result of a CGT event if
they sold an asset for less than they paid for it. The entity‟s capital loss is the difference between
their reduced cost base and their capital proceeds.
The amount reported in the company tax detailed table is the sum of current year capital losses
applied to capital gains calculated by using the indexation method, discount method and other
method (that is, the sum of Part D, labels E, F, G). These capital losses can reduce any capital gains
an entity makes during the year to determine their net capital gain if the losses do not include:

   assets acquired before 20 September 1985

   personal use assets

   collectables, or

   other losses that are disregarded.

Any current year capital losses from collectables calculated are used to reduce capital gains
from collectables and work out an entity‟s net capital gains from collectables. (Net capital gains from
collectables amounts are included in the total amount of total current year capital gains.) Any
current year capital losses from collectables calculated can only be applied to reduce current year
capital gains from collectables. They cannot be used to reduce other capital gains from other
sources. Capital losses from collectables not used during the current year can be carried over to
future income years and used to reduce capital gains from collectables in future income years.

The total capital losses of current year applied amount reported at part D, label H cannot exceed the
total current year capital losses amount reported at part B, label D. Total current year capital
losses (part B, label D) is the sum of the current year capital losses the entity has made from
shares and units in unit trusts, real estate, other CGT assets and any other CGT events.

Current year capital losses applied can only reduce current year capital gains to $0 (that is, current
capital losses applied amounts cannot exceed current year capital gains amounts). Any excess
capital losses can be used to reduce capital gains in future years.

(Please refer to the Tax Office publication, Guide to capital gains tax 2001–02 for a full description of
the methods and how the current year capital losses applied is calculated.)


Net capital losses of prior years applied (or Prior year net capital losses applied)
(part D, label L)

Capital losses from prior years are excess capital losses from previous years that have not been
applied to reduce an entity‟s capital gains during past income years. (The losses may not have been
applied because capital losses can only reduce capital gains to $0.). These excess capital losses are
carried over to the current (or future) income year(s) to reduce capital gains.

Prior year net capital losses are applied in the order the entity made them (for example, an entity
would use a net capital loss from 1998–99 before using a net capital loss made in 1999–2000).

In addition prior year net capital losses are reduced by any adjustment for commercial debts
forgiven. (See page 8 of Guide to capital gains tax 2001–02 and pages 39–40 or pages 60–62 of the
Company tax return instructions 2002.)

Like current year capital losses from collectables, prior year net capital losses from collectables can
only be used to reduce capital gains from collectables and work out an entity‟s net capital gains from
collectables during the current (or future) year(s). (Net capital gains from collectables amounts are
included in the total amount of total current year capital gains.)

The amount reported in the company tax detailed table is the sum of the prior year net capital
losses applied to capital gains calculated by using the indexation method, discount method and
other method (that is, the sum of Part D, labels I, J, K). It excludes prior year net capital losses
from collectables.
Note that prior year net capital losses applied amounts cannot exceed current year capital gains
amounts less current year capital loss amounts. Prior year net capital losses applied amounts can
only reduce current year capital gains to $0. Any excess capital losses can be used to reduce capital
gains in future years.

(Please refer to the Tax Office publication, Guide to capital gains tax 2001–02 for a full description of
the methods and how the prior year net capital losses capital losses applied is calculated.)


Capital losses transferred in (or Capital losses transferred in applied) (part D,
label P)

A loss company can transfer a net capital loss to another company – the gain company – so that the
gain company can apply the net capital loss in working out its net capital gain for the income year of
the transfer. Both the loss company and the gain company must be members of the same wholly
owned group. The transferred loss must be „surplus‟ in the sense that, for the income year of the
transfer, the transferring company does not have enough capital gains against which to apply it,
whilst the other company – the gain company – does have enough capital gains against which to
apply it.

If a company has two or more net capital losses that can be transferred, the net capital losses are
transferred in the order in which they were made. The capital losses transferred in to the gain
company need to be applied in the order they were received. The gain company must have enough
capital gains to absorb the capital losses transferred in.

The amount reported in the company tax detailed table is the sum of the capital losses transferred
in applied to capital gains calculated by using the indexation method, discount method and other
method (that is, the sum of Part D, labels M, N, O).

Note that the capital losses transferred in applied amount cannot exceed the current year capital
gains less current year capital losses applied and less prior year net capital losses applied amount.
Like other capital losses, the capital losses transferred in applied amount can only reduce current
year capital gains to $0.

For more information on the transfer of net capital losses please refer to pages 17–18 of the Losses
schedule instructions 2002.
Losses schedule items – companies
Some company tax detailed tables in Taxation statistics 2001–02 reports statistics on some items
reported in the 2002 losses schedule. These items are described below.

Note: Statistics for the schedule items for income years before 2001-02 were sourced from past
company tax returns (see company tax detailed table 7). Please refer to the glossary of past editions
of Taxation statistics or past editions of the Company tax return instructions for the definition of the
CGT schedule items below for income years prior to 2001-02.

Statistics for the 2001-02 income year were sourced from the 2002 losses schedule. Not all
companies are required to complete and attach a losses schedule to their company returns. Hence,
the 2001-02 losses schedule items statistics reported in the company tax detailed tables only refer
to/represent companies that completed the schedule and whose schedules have been processed as
at 31 October 2003.

For more information on the losses schedule and entities (including companies) who are required to
complete the schedule, please see list of useful publications within Taxations Statistics 2001–02:
Glossaries available on the Tax Office website.


Tax losses transferred out (part E, label Q)

A group company may transfer the whole or a part of a tax loss to another group company where
the conditions laid down in Subdivision 170-A of the Income Tax Assessment Act 1997 (ITAA 1997)
are satisfied. Some of these conditions are listed on pages 16-17 of the Losses schedule instructions
2002.

The tax losses transferred out amount shown in the company tax detailed table is the total tax
losses transferred out by the company for the income year. For the 2001–02 income year, this
amount is exclusive of GST and is equal to the sum of labels G,H,I and J of Part E, item 3 of the
2002 losses schedule. (Labels G, H, I and J show the amounts of tax losses transferred out by the
company to group companies under Subdivision 170-A if the ITAA 1997.)


Net capital losses transferred out (part E, label K)

A loss company can transfer a net capital loss to another company – the gain company – so that the
gain company can apply the net capital loss in working out its net capital gain for the income year of
the transfer. Both the loss company and the gain company must be members of the same wholly
owned group. The transferred loss must be „surplus‟ in the sense that, for the income year of the
transfer, the transferring company does not have enough capital gains against which to apply it,
whilst the other company – the gain company – does have enough capital gains against which to
apply it

For more information on the transfer of net capital losses please refer to pages 17–18 of the Losses
schedule instructions 2002.

The net capital losses transferred out amount shown in the company detailed table is the total of net
capital losses transferred out by the company. For the 2001-02 income year, this amount is
exclusive of GST and is equal to the sum of labels L, M, N and J of Part E, item 4 of the 2002 losses
schedule. (Labels L, M, N and O show the amounts of net capital losses transferred out by the
company to group companies under subdivision 170-B of the Income Tax Assessment Act 1997.).
List of useful publications - Companies
The below list outlines all of the publications that have been referred to within Company Glossary
2001–02.

To download these documents, please refer to the Taxation statistics 2001–02: Glossaries on the tax
office website.



2002 Company tax return

2002 Company tax return instructions

2002 Capital Gains Tax (CGT) schedule

2001–02 Guide to Capital Gains Tax (CGT)

2002 losses schedule

2002 losses schedule instructions

2002 Business industry codes

2001-02 Information for Primary Producers

Fringe Benefits Tax (FBT) – A guide for employers

Fringe Benefits Tax (FBT) reform – the interaction between FBT and GST

2001–02 Guide to depreciating assets

2002 Research and development tax concession schedule

2002 Research and development tax concession schedule instructions

2001–02 Deductions for pre-paid expenses

Guide to debt and equity tests

Foreign income return form guide

								
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