A –Taxable or net income
Complete A as it is mandatory.
If the company is a resident company for tax purposes, taxable income equals assessable income derived from all sources less allowable deductions incurred in gaining that income.
If the company is a non-resident company, 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.
Write at A the amount of taxable income of $1 or more. The amount at A will often be the amount written at T Taxable/net income or loss. Write zero (0) at A if the company has no taxable income or has a loss amount written at T Taxable/net income or loss item 7 with L in the box at the right of the amount.
Public trading trusts and corporate unit trusts with an income year that started before 1 July 2016 show net income at A.
T1 – Tax on taxable or net income
Complete T1 as it is mandatory.
Write at T1 the amount of tax payable before the allowance of any rebates, tax offsets, credits or FDT offsets. The tax rates applicable to companies are listed in Appendix 7.
An amount must be included at T1 even if it is zero (if zero write 0).
M – R&D recoupment tax
Only for use by early balancing entities with a substitute accounting period.
Write at M the extra tax required on your recoupment as calculated under Subdivision 355-G of the ITAA 1997.
If you have claimed the R&D tax incentive and you have received or become entitled to receive a government recoupment (such as a government grant or reimbursement) that relates to expenditure that you or a related entity have claimed a notional deduction for under the R&D tax incentive, the income tax you are liable to pay on the recoupment will be increased. This is referred to as a clawback adjustment.
The amount to be shown at M is the extra income tax required on your recoupment.
The clawback adjustment is capped so that the extra tax payable cannot exceed the amount of the grant you received.
For more information on how this amount is calculated, see Clawback adjustments.
B – Gross tax
If you are not an RSA provider, write at B the total of amounts at T1 and M.
If you are an RSA provider, write at B the total of amounts at T1, M and any further tax on no-TFN contributions recorded at X item 19.
Complete B to ensure smooth processing of your tax return.
For more information on the further tax on no-TFN contributions, see Tax file numbers and super contributions.
Priority of use of tax offsets
The first category of tax offsets to be applied against gross tax is C Non-refundable non-carry forward tax offsets. If the offsets are greater than the gross tax, the excess offsets cannot be used and are lost.
If tax is still payable after applying this category of offsets, at T2 Subtotal 1, the second category, D Non-refundable carry forward tax offsets, is applied against any remaining tax payable at T2.
Any excess of offsets in this category may be carried forward to the next year (subject to the tax offset carry forward rules in Division 65 of the ITAA 1997). If tax is still payable after applying the Non-refundable carry forward tax offsets at T3 Subtotal 2, the third category E Refundable tax offsets is applied against the tax remaining. Any excess of refundable tax offsets above the residual tax payable at T3 becomes part of the credits available to you and is shown at I Remainder of refundable tax offsets.
However, if tax is still payable at T4 Subtotal 3 after applying tax offsets from the above three categories, F Franking deficits tax offsets are applied against this remaining tax to determine your tax payable amount. Any excess of F over the residual tax payable at T4 may be carried forward to a later income year.
Continue to: Calculation statement labels C, T2, D and T3