Entities with a substituted accounting period

Applying for a SAP

An entity's accounting period is ordinarily the 12-month period ending on 30 June.

You can seek leave from the Commissioner to adopt an alternative annual accounting period (known as a substituted accounting period or SAP).

Use the Application for a substituted accounting period (NAT 5087, PDF 1.7MB)This link will download a file form to:

apply for a SAP
revert to a standard accounting period ending 30 June.

When you apply, you must provide:

a reason for requesting a SAP
supporting evidence.

Find out what supporting evidence you need to provide and why it's important to lodge as early as possible. For guidance on circumstances that warrant granting a SAP, see Law Administration Practice Statement PS LA 2007/21 Substituted Accounting Periods.

We accept retrospective or out-of-date applications in limited circumstances. See PS LA 2007/21 for details.

Lodging your income tax return with a SAP

If you've been granted leave to adopt a SAP, you must meet different lodgment requirements.

See Substituted Accounting Periods to find out:

your lodgment date
tax agent concessions
more about how SAPs work.

Transitioning to a SAP

When you adopt a SAP, the end date of your accounting period changes. This usually results in a transitional period of more or less than 12 months. You must lodge an income tax return for the transitional period.

We will determine and notify you of your transitional period when we approve your SAP.

To better understand your transitional period, see examples of transitional periods for scenarios including:

first time lodgers
existing entities
entities exiting consolidated groups.

When you've adopted a SAP, the new accounting period will involve either late or early balancing in relation to a 30 June year end. Whether you are late or early is determined when your application is approved.

For more on how and when an entity transitions to a SAP, see PS LA 2007/21.

What tax return form to use

Prepare your tax return on the form for the year in lieu of which the accounting period has been adopted. For example:

if you adopted a SAP ending 31 December 2024 you're an early balancer
your transitional period is in lieu of the following income year ending 30 June, being the year ended 30 June 2025
this means you should prepare your tax return on the 2025 tax return form.

We try to release tax time stationery as early as possible. However, if the relevant form has not been produced by the date you wish to lodge, you must use the most recently available tax return form, whether lodging electronically or by paper.

If you are transitioning to a SAP, you must lodge a paper form if you are:

not lodging the entity's first tax return
lodging before we release next year's tax time stationery.

For more information, see what tax return form to use and Example 5 – early December SAP.

Franking period

Your transitional period will affect your franking period.

For a corporate tax entity that is not a private company, the franking period depends on the length of its income year. The franking period is different for an early or late balancing corporate tax entity that has adopted a SAP.

Lodging additional information for early balancers

Tax return labels may change when new stationery is released.

If you're an early balancer and lodged using the most recent tax return form, you may need to lodge an amendment if label changes are relevant to your circumstances.

We expect to publish draft details of tax return label changes each year in December. Where further changes are required due to law changes not currently known or anticipated, we will update the tax return label changes and provide further advice.

Tax return label changes

To help early balancers, each year we provide information on label changes we expect in the new tax time stationery to be released at the end of May.

While tax returns can be lodged from 1 January, our processing for the new labels will not take place before our system is deployed in June 2025.

Company tax return 2025

In 2025, there are label changes to the company tax return, items 7, 28 and 29.

Label changes for item 7

Item 7 Reconciliation to taxable income or loss
Change	Label	Description
New	Y	Build to rent capital works deduction at 4%
Removed	J	Small business skills and training boost
Removed	K	Small business energy incentive

Label Y Build to rent capital works deduction at 4%

Item 7 has been modified to include new label Y for 'Build to rent capital works deduction at 4%'.

From 1 January 2025, owners of eligible build to rent developments may make a choice for their development to access the tax incentives. The tax incentives include increasing the capital works tax deduction depreciation rate for active new build to rent developments from 2.5% to 4% per year.

For more information, see Incentives to increase the supply of housing.

Label J Small business skills and training boost

Item 7 has been modified to remove label J for 'Small business skills and training boost'.

The small business skills and training boost ended on 30 June 2024.

As an early balancer, if you incurred eligible expenditure in your 2024-25 income year (up until 30 June 2024), you may be able to claim the bonus deduction in respect of this expenditure in your 2024–25 tax return.

Early balancers completing their 2024–25 tax return using the:

2024 form – claim the bonus deduction at item 7 Reconciliation to taxable income or loss label J Small business skills and training boost.
2025 form – claim the bonus deduction at item 7 Reconciliation to taxable income or loss label X Other deductible expenses.

For more information, see Small business skills and training boost.

Label K Small business energy incentive

Item 7 has been modified to remove label J for 'Small business skills and training boost'.

The small business energy incentive ended on 30 June 2024.

As an early balancer, if you incurred eligible expenditure in your 2024–25 income year (up until 30 June 2024), you may be able to claim the bonus deduction in respect of this expenditure in your 2024–25 tax return.

Early balancers completing their 2024–25 tax returning using the:

2024 form - claim the bonus deduction at item 7 Reconciliation to taxable income or loss label K Small business energy incentive.
2025 form - claim the bonus deduction at item 7 Reconciliation to taxable income or loss label X Other deductible expenses.

For more information, see Small business energy incentive.

Label changes for item 28

Label Z Did you have branch operations in Australia or overseas, or a direct or indirect interest in a foreign, trust, foreign company, controlled foreign entity or transferor trust?

Item 28 has been modified from 'Overseas interests' to 'Overseas interests and Australian branch operations'.

Label Z has been modified from 'Did you have overseas branch operations or a direct or indirect interest in a foreign trust, foreign company, controlled foreign entity or transfer trust' to 'Did you have branch operations in Australia or overseas, or a direct or indirect interest in a foreign, trust, foreign company, controlled foreign entity or transferor trust.'

This label change is to clarify that foreign resident entities that carry on Australian branch operations must tick yes to this label.

Label changes for item 29

Label O Were the thin capitalisation or debt deduction creation rules applicable to you?

Item 29 has been modified from 'Thin capitalisation' to 'Thin capitalisation and debt deduction creation'.

The thin capitalisation rules and the debt deduction creation rules (DDCR) may be applicable to companies. The International Dealings Schedule (IDS) requires additional reporting on both the thin capitalisation rules and the DDCR. As the DDCR apply for income years starting on or after 1 July 2024, for early balancers the IDS will only require disclosure of restructures in relation to the DDCR.

Accordingly, Label O has been modified from 'Did the thin capitalisation provisions affect you?' to 'Were the thin capitalisation or debt deduction creation rules applicable to you?'.

The following table identifies when the thin capitalisation rules and the DDCR are applicable.

Table: Thin capitalisation rules and debt deduction creation rules application
Entity type	Thin capitalisation rules applicable?	DDCR applicable?
General class investor	Yes	Yes
Outward investing financial entity (non-ADI)	Yes	Yes
Inward investing financial entity (non-ADI)	Yes	Yes
Outward investing entity (ADI)	Yes	No
Inward investing entity (ADI)	Yes	No

You must answer yes at question 29 – label O – Were the thin capitalisation or debt deduction creation rules applicable to you? if:

the thin capitalisation rules or DDCR are applicable to you according to the table above
your debt deductions, together with those of any associate entities, are more than $2 million for the income year.