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Income tax return: what to report

The time to report and lodge your annual tax return for your business is fast approaching. Remember, what you must report will depend upon the type of business entity you have.

Sole traders
As a sole trader, you are required to lodge a tax return even if your income is below the tax-free threshold. This will include:
– tax return for individuals including the supplementary section
– business and professional items schedule for individuals.

You must report:
– The business income minus the business deductions you are eligible to claim.
– The other income like wages and salary (from a payment summary), rental income and dividends, minus deductions against this income.

Partnerships and partners
The partnership must lodge a partnership tax return. This will include the partnership’s net income (assessable income less allowable expenses and deductions).

The ATO does not require the partnership to pay tax on the income it earns. Rather, every partner must pay tax on the share of net partnership income you each receive.

For you (as an individual partner) you must report:
– Your share of the partnership net income or loss.
– Any other assessable income like wages and salary (shown on a payment summary), dividends and rental income.

Trusts and Beneficiaries
When you operate your business through a trust, the trustee will be required to lodge a trust tax return. The trust reports its net income or loss (the trust’s assessable income minus deductions).
Each trust beneficiary must lodge their tax return, i.e., an individual or company tax return.

As a beneficiary of a trust, you must report:
– Income received from the trust.
– Other assessable income including dividends, salary and wages (on an individual’s payment summary), and rental income.

Companies
You must lodge a company tax return. The company is required to report its taxable income, tax offsets and credits, PAYG instalments and the amount of tax it is required to pay on that income or the amount that is refundable. Your personal income is kept separate from the company’s income.

With deregistered companies – ensure you lodge a final company tax return before it is deregistered by the Australian Securities and Investments Commission (ASIC). The ATO will be unable to process a company tax return if the company is deregistered.

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News

Updates to the unclaimed superannuation money protocol

January 15, 2020

The Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA), more commonly known as the unclaimed superannuation money protocol, has been updated recently to provide a clearer structure going forward.

SUMLMA provides guidance on in relation to unclaimed money, lost member accounts, superannuation accounts of former temporary residents and their associated reporting and payment obligations. The update has now added content on inactive low balance accounts.

The act now clearly defines what is an inactive low-balance account, how statements and payments work, the registering of lost members and various rules for special cases.

It is important to note that the information in the protocol does not apply to super providers that are trustees of a state or territory public sector super scheme, in which:

The protocol provides administrative guidance only and should not be taken as a replacement for the law or technical reporting specifications.