6. Income

Instructions to complete the income portion of the calculation of total profit and loss.

B – Gross payments subject to foreign resident withholding

Only complete label B if the company is a foreign resident. An Australian resident should not include an amount, such as, foreign sourced income, at label B.

Foreign resident withholding applies to payments made to foreign residents where the payment is:

• for promoting or organising casino gaming junket activities
• for entertainment or sports activities, or
• under contract for the construction, installation and upgrading of buildings, plant and fixtures, and for associated activities.

This withholding is not a final tax. A credit can be claimed in the Calculation statement at label H2 Credit for tax withheld – foreign resident withholding.

Write at label B the gross payments made to the company that were subject to foreign resident withholding. Gross payments include amounts of tax withheld, or that should have been withheld.

Do not include at label B amounts subject to foreign resident withholding that were distributed to the company from a partnership or trust. Include these at labels D Gross distribution from partnerships or E Gross distribution from trusts.

Do not include at this label amounts subject to the foreign resident capital gains withholding.

Do not include at B amounts that are subject to a final withholding tax, for example, amounts subject to withholding tax under section 128B of the ITAA 1936. Include these amounts at:

• item 6 Income – label F Gross interest or H Total dividends or R Other gross income
• item 7 – label Q Other income not included in assessable income in the Reconciliation to taxable income or loss.

A final withholding tax cannot be claimed at in the Calculation statement – label H2 Credit for tax withheld – foreign resident withholding.

If an amount is written at label B, complete and attach a Non-individual PAYG payment summary schedule 2023. For instructions on completing this schedule, see Non-individual PAYG payment summary schedule 2023.

Any income included at label B that is not assessable in Australia should also be included at item 7 – label V Exempt income.

A – Gross payments where ABN not quoted

Write at label A the gross payments made to the company that were subject to withholding where an ABN was not quoted. Gross payments include amounts of tax withheld.

If you write an amount at label A:

• complete a Non-individual PAYG payment summary schedule 2023. For instructions on completing this schedule, see Non-individual PAYG payment summary schedule 2023, and
• ensure that you write the corresponding amount of tax withheld in the Calculation statement – label H3 Credit for tax withheld where ABN is not quoted.

C – Other sales of goods and services

Write at label C the gross sales of:

• trading stock including wool, produce and livestock, including the assessable value, for income tax purposes, of forced disposal
• manufactured goods
• goods taken ex-stock
• livestock killed for rations or exchanged for other goods or services
• gross income from sale of goods not treated as trading stock, and
• gross earnings from services.

Gross income is to be shown before any legal set off or other netting off between amounts.

Do not include at label C:

• any payments where tax has been withheld for failure to quote an ABN (include these amounts at label A Gross payments where ABN not quoted)
• any amounts subject to foreign resident withholding (include these amounts at label B Gross payments subject to foreign resident withholding)
• sales of shares and land that are not held as trading stock for income tax purposes.

D – Gross distribution from partnerships

Write at label D the gross distributions from all partnerships, including any share of franking credits attributable to dividends paid by an Australian company.

Include at label D:

• any amounts subject to foreign resident withholding in Australia that were distributed to the company from a partnership
• the company’s share of credit from foreign resident withholding.

A credit can be claimed for the company’s share of credit from foreign resident withholding in the Calculation statement – label H2 Credit for tax withheld – foreign resident withholding.

If the TOFA rules apply to the company, show at label D all distributions from partnerships. This includes amounts from financial arrangements subject to the TOFA rules.

New rules applying to stapled structures took effect from 1 July 2019. This label may now include an amount referable as Non-Concessional MIT income (NCMI) or Excluded from NCMI.

Do not include at label D:

• distributions from a corporate limited partnership (unless that distribution is attributable to profits made before it became a corporate limited partnership). Include these amounts at item 6 – label H Total dividends
• any amount referable to Australian franking credits received indirectly from a New Zealand franking company through a partnership. Include these amounts at item 7 – label C Australian franking credits from a New Zealand company.

Include any adjustment for taxation purposes at item 7 – label B Other assessable income or label X Other deductible expenses.

Special rules apply if an entity is a partner in a partnership and joins a consolidated or MEC group part way through an income year.

Also include the company’s share of franking credits included in the gross distribution from the partnership in the Calculation statement – label C Non-refundable non-carry forward tax offsets.

However, the company is not entitled to a franking tax offset if:

• the relevant interest is not held at risk as required under the holding period and related payments rules
• there is some other manipulation of the imputation system, or
• the gross distribution from the partnership is exempt income or non-assessable non-exempt income (other than because of certain provisions mentioned in section 207-110 of the ITAA 1997).

Do not write the amount of franking credit attached to these distributions in the Calculation statement – label C Non-refundable non-carry forward tax offsets. Instead, the company is entitled to a deduction under section 207-150 or section 207-95 of the ITAA 1997 equal to its share of the franking credit, and this is included at item 7 – label X Other deductible expenses.

If the amount at label D is a loss, print code L in the box at the right of the amount.

To the extent that family trust distribution tax (FTDT) has been paid on income received by the company from partnerships, that amount is excluded from the assessable income of the company under section 271-105 of Schedule 2F to the ITAA 1936.

If the company’s share of partnership income includes an amount received indirectly from a closely held trust on which trustee beneficiary non-disclosure tax (TBNT) has been paid, you do not need to include the amount in the company’s assessable income.

Any losses or outgoings incurred in deriving an amount that is excluded from assessable income because FTDT or TBNT has been paid are not deductible. The company cannot claim a tax offset for any franking credits attributable to the whole or a part of a dividend that is excluded from assessable income under these provisions.

Record keeping

Keep a record of the following:

• full name of the partnership
• TFN of the partnership, if known
• amount of income
• deductible expenses relating to the amount of income that were not claimed in the Partnership tax return but are claimed on the company tax return.

Include expenses incurred by the company as a partner at item 6 – label S All other expenses.

Add back non-deductible expenses at item 7 – label W Non-deductible expenses.

E – Gross distribution from trusts

Write at label E the total amount of gross distributions received from trusts, including any share of franking credits attributable to dividends paid by an Australian company as advised by the trustee.

Include:

• any amounts subject to foreign resident withholding in Australia that were distributed to the company from a trust
• the company’s share of credit from foreign resident withholding.

A credit can be claimed for the company’s share of credit from foreign resident withholding in the Calculation statement – label H2 Credit for tax withheld – foreign resident withholding.

If the TOFA rules apply to the company, show at label E all distributions from trusts. This includes amounts from financial arrangements subject to the TOFA rules.

New rules applying to stapled structures took effect from 1 July 2019. This label may now include an amount referable as Non-concessional MIT income (NCMI) or Excluded from NCMI.

Do not include at label E:

• distributions from a public trading trust or corporate unit trust – include these amounts at item 6 – label H Total dividends
• capital gains received from a trust. Include these at item 7 – label A Net capital gain
  For information on how to include an amount of a capital gain received from a trust at label A (for example, how to gross-up a capital gain from a trust) see Guide to capital gains tax 2023.
• any amount referable to Australian franking credits received indirectly from a New Zealand franking company through a trust – include these amounts at item 7 – label C Australian franking credits from a New Zealand company.

The amount at label E cannot be a loss.

Also write the company’s share of the franking credits included in the gross distribution from the trust at C Non-refundable non-carry forward tax offsets in the Calculation statement. However, the company is not entitled to a franking tax offset if:

• the relevant interest is not held at risk as required under the holding period and related payments rules
• there is some other manipulation of the imputation system, or
• if the gross distribution from the trust is exempt income or non-assessable non-exempt income (other than because of certain provisions mentioned in section 207-110 of the ITAA 1997).

Do not write the amount of franking credit attached to these distributions at C Non-refundable non-carry forward tax offsets.

Instead, the company is entitled to a deduction under section 207-150 or section 207-95 of the ITAA 1997, and this is included at item 7 – label X Other deductible expenses.

Include any part of a distribution in the gross amount, for example, a part of a distribution that is not taxable income. Write any adjustment for taxation purposes at item 7. Include that part of the distribution at item 7 – label Q Other income not included in assessable income, to ensure that the amount is not included in taxable income.

Special rules apply if an entity is a beneficiary or object of a trust and joins a consolidated or MEC group part way through an income year.

To the extent that family trust distribution tax (FTDT) has been paid on income or capital of a trust to which the company is presently entitled or which has been distributed to the company, that income or capital is excluded from the assessable income of the company under section 271-105 of Schedule 2F to the ITAA 1936.

If the company’s share of trust income includes an amount received indirectly from a closely held trust on which trustee beneficiary non-disclosure tax (TBNT) has been paid, you do not need to include the amount in the company’s assessable income.

Any losses or outgoings incurred in deriving an amount that is excluded from assessable income because FTDT or TBNT has been paid are not deductible. The company cannot claim a tax offset for any franking credits attributable to the whole or a part of a dividend that is excluded from assessable income under these provisions.

In the CODE box, print the code from table 2 that best describes the type of trust for the amount of income written at label E. If this amount is from more than one type of trust, print the code that represents the trust for the greatest amount of income. Descriptions of the types of trusts listed in table 2 are in table 3.

If the type of trust making the distribution is unknown, contact the trustee of that trust.

Table 2: Trust codes

Code	Type
D	Deceased estate
E	Testamentary trust
F	Fixed trust, other than a fixed unit trust or a public unit trust shown at labels U, P or Q of this table
H	Hybrid trust
S	Discretionary trust, where the main source of income of the trust is from service and/or management activities
T	Discretionary trust, where the main source of income of the trust is from trading activities
I	Discretionary trust, where the main source of income of the trust is from investment activities
M	Cash management unit trust
U	Fixed unit trust (including Corporate Collective Investment Vehicle (CCIV) sub-fund trust), other than a public trust described in label P or Q of this table
P	Public unit trust (listed), other than a cash management unit trust
Q	Public unit trust (unlisted), other than a cash management unit trust

Table 3: Descriptions of trusts

Trust type	Description
Testamentary trust	A trust that resulted from a will, codicil, court order, or intestacy
Fixed trust	A trust in which persons have fixed entitlements (as defined in section 272-5 of Schedule 2F to the ITAA 1936) to all of the income and capital of the trust at all times during the income year
Hybrid trust	A trust that is not a fixed trust but in which persons have fixed entitlements (as defined in section 272-5 of Schedule 2F to the ITAA 1936) to income or capital of the trust during the income year
Discretionary trust	A trust that is neither a fixed trust nor a hybrid trust and under which persons benefit from income or capital of the trust upon the exercise of a discretion by persons, usually the trustee
Fixed unit trust	A fixed trust in which interest in the income and capital of the trust are represented by units
Public unit trust	A fixed unit trust that is a widely held unit trust (as defined in section 272-105 of Schedule 2F to the ITAA 1936) at all times during the income year
Public unit trust, listed	A public unit trust in which any of its units were listed for quotation in the official list of a stock exchange in Australia or elsewhere during the income year
Public unit trust, unlisted	A public unit trust in which none of its units were listed for quotation in the official list of a stock exchange in Australia or elsewhere during the income year

Record keeping

Keep a record of the following:

• full name of the trust
• TFN of the trust, if known
• amount of income
• deductible expenses relating to the amount of income.

Include expenses incurred by the company as a beneficiary at item 6 Expenses – label S All other expenses.

Add back non-deductible expenses at item 7 – label W Non-deductible expenses item 7.

X – Forestry managed investment scheme income

Definitions

A company is an initial participant in a forestry managed investment scheme (FMIS) if:

• it obtained its forestry interest in the FMIS from the forestry manager of the scheme, and
• its payment to obtain the forestry interest in an FMIS results in the establishment of trees.

A company is a subsequent participant in an FMIS if it acquired its interest through secondary market trading. This means it acquired its interest other than as an initial participant, usually by purchasing that interest from an initial participant.

The forestry manager of an FMIS is the entity that manages, arranges or promotes the FMIS.

A forestry interest in an FMIS is a right to benefits produced by the FMIS (whether the right is actual, prospective or contingent, and whether it is enforceable or not).

The amount of the company’s total forestry scheme deductions is the total of all the amounts that it can deduct or has deducted for each income year that it held its forestry interest. For more information on amounts that you can deduct, see item 7 – label U Forestry managed investment scheme deduction.

The amount of the company’s incidental forestry scheme receipts is the total of all the amounts that it received from the FMIS in each income year that it held its forestry interest, other than amounts received because of a CGT event, that is, a sale or a harvest.

Write at item 6 – label X Forestry managed investment scheme income the total income from the following activities for each FMIS in which the company holds a forestry interest.

Do not include capital gains from an FMIS; show these at item 7 – label A Net capital gain. For more information on the CGT treatment of the company’s forestry interests, see Guide to capital gains tax 2023.

If the company is a member of a collapsed agribusiness managed investment scheme, then for information on calculating your income and deductions, see Collapse and restructure of agribusiness managed investment schemes – participant information.

Participants in an FMIS – for an initial participant

Thinning receipts

If the company received thinning proceeds from its forestry interest) – include the actual amount received at item 6 – label X Forestry managed investment scheme income.

Sale and harvest receipts – forestry interest no longer held

Include the market value of the forestry interest at the time of the CGT event at item 6 – label X Forestry managed investment scheme income, if the company:

• ceased holding its forestry interest as a result of a CGT event (because it sold its interest or it received harvest proceeds) and
• has claimed a deduction, or can claim a deduction, or would be entitled to deduct such amounts but for a CGT event happening within 4 years after the end of the income year in which the company first pays an amount under the FMIS

Sale and harvest receipts – forestry interest still held

Include at item 6 – label X Forestry managed investment scheme income the amount by which the market value of the forestry interest was reduced as a result of the CGT event, if:

• a CGT event happened and the company still held its forestry interest (because it sold part of its interest or there was a partial harvest) and
• the company has claimed a deduction, or can claim a deduction, or would be entitled to deduct such amounts but for a CGT event happening within 4 years after the end of the income year in which the company first pays an amount under the FMIS

Participants in an FMIS – for a subsequent participant

Thinning receipts

If the company received thinning proceeds from its forestry interest – include the actual amount received at item 6 – label X Forestry managed investment scheme income.

Sale and harvest receipts – forestry interest no longer held

Include at item 6 – label X Forestry managed investment scheme the amount worked out below if the forestry interest is no longer held and the company both:

• ceased holding its forestry interest as a result of a CGT event (because it sold its interest or it received harvest proceeds), and
• has deducted, or can deduct, or could have deducted, an amount if the company had paid the amount under the FMIS in relation to the forestry interest

The amount at X Forestry managed investment scheme income is the lesser of the following 2 amounts:

• the market value of the forestry interest at the time of the CGT event, or
• the amount (if any) by which the total forestry scheme deductions exceeded the incidental forestry scheme receipts.

Sale and harvest receipts – forestry interest still held

Include at item 6 – label X Forestry managed investment scheme income the amount worked out below if the forestry interest is still held, and both:

• a CGT event happened and the company still held its forestry interest (because it only sold part of its interest or there was a partial harvest) and
• the company can deduct, or has deducted, or could have deducted, an amount if the company had paid the amount under the FMIS in relation to the forestry interest.

The amount included at item 6 – label X Forestry managed investment scheme income is worked out using the following steps:

1. Work out the following 2 amounts:

• the market value of the forestry interest at the time of the CGT event
• the amount (if any) by which the total forestry scheme deductions exceeded the incidental forestry scheme receipts (net deductions).

2. Use the lesser of the 2 amounts above in the following formula:

Lesser of 2 amounts above

× [the decrease (if any) in the market value of the forestry interest (as a result of the CGT event) 

÷ the market value of the forestry interest just before the CGT event]

In a future income year (a year in which the company receives further proceeds from a harvest or the sale of its forestry interest), disregard the amount of the net deductions that has already been included at item 6 – label X Forestry managed investment scheme income.

To complete this item

Add up all the amounts you worked out for the company’s FMIS income and write the total at item 6 – label X Forestry managed investment scheme income.

See Examples 7 and 8 for how to calculate the amount you show at item 6 – label X Forestry managed investment scheme income where the company is a subsequent participant that holds the forestry interest on capital account.

For more information on the CGT treatment of a company’s forestry interest, see Guide to capital gains tax 2023.

 

F – Gross interest

Write at item 6 – label F Gross Interest the total interest from all sources, including interest received from or credited by an associate, a shareholder or an associate of a shareholder. The amount at label F cannot be a loss.

If the TOFA rules apply to the company, show at item 6 – label F Gross Interest all interest received or credited to it. This includes interest from financial arrangements subject to the TOFA rules.

Record keeping

Keep a record of the following:

• name and address of the borrower
• amount of principal received or credited.

G – Gross rent and other leasing and hiring income

Write at item 6 – label G Gross rent and other leasing and hiring income the company’s total income from leasing and hiring activities. The amount at label G cannot be a loss.

For more information, see Rental properties 2023.

H – Total dividends

Write at item 6 – label H Total dividends the total dividends, including all dividends and non-share dividends franked and unfranked, foreign source dividends (including New Zealand dividends and supplementary dividends, bonus shares), dividend applied under dividend reinvestment plans, deemed dividends, and liquidators’ and other company distributions. The amount at label H cannot be a loss.

For an overview of the debt and equity rules and an explanation of a non-share dividends, see Guide to the debt and equity tests.

If the TOFA rules apply to the company, show at item 6 – label H Total dividends all unfranked dividends that were paid or credited to it from all sources. This includes unfranked dividends from financial arrangements subject to the TOFA rules.

Do not include at item 6 – label H Total dividends:

• a dividend received under a demerger unless the head entity of the demerger group has elected under subsection 44(2) of the ITAA 1936 that the dividend be treated as an assessable dividend
• any franking credits that were attached to dividends received from an Australian company; include these amounts at item 7 – label J Franking credits
• any Australian franking credits from a New Zealand franking company; include them at item 7 – label C Australian franking credits from a New Zealand company.

All transactions that occur between members of a consolidated or MEC group, including distributions between group members, are not recognised for income tax purposes. Do not include at item 6 – label H Total dividends distributions between members of the same consolidated or MEC group.

To the extent that family trust distribution tax (FTDT) has been paid on a dividend (including a non-share dividend) paid or credited to the company by another company that has made an interposed entity election, that amount is excluded from the assessable income of the company under section 271-105 of Schedule 2F to the ITAA 1936.

Any losses or outgoings incurred in deriving an amount that is excluded from assessable income under section 271-105 of Schedule 2F to the ITAA 1936 are not deductible. The company cannot claim a tax offset for any franking credit attributable to the whole or a portion of a dividend that is excluded from assessable income under section 271-105 of Schedule 2F to the ITAA 1936.

Record keeping

Keep a record of the following for dividends and non-share dividends:

• name of the payer
• date received or credited or applied
• franked amount
• unfranked amount
• the portion of unfranked amount declared to be conduit foreign income (CFI)
• franking credit allocated
• franking percentage
• gross amount
• type of distribution, for example, foreign source dividend, bonus shares, phasing-out dividend, liquidator’s distribution
• any withholding tax amount has been deducted.

I – Fringe benefit employee contributions

Write at item 6 – label I Fringe benefit employee contributions all payments that the company has received from recipients of fringe benefits.

Employee contributions form part of the employer’s or associate’s assessable income if employees make payments for fringe benefits that they have received.

If you are the head company of a consolidated or MEC group, include all fringe benefit employee contributions received by you or by an entity that was a subsidiary member of the group when the contribution was received.

Q – Assessable government industry payments

Generally, government credits, grants, rebates, benefits, bounties and subsidies are assessable income in the hands of the recipient if they are received in, or for, the carrying on of a business. This generally includes payments of a capital nature. However, payments relating to the commencement or cessation of a business may not be assessable income but may give rise to a capital gain. In certain circumstances a specific grant or payment is considered to be exempt income or non-assessable non-exempt income.

A number of Commonwealth, State and Territory government grants and payments have been made available to businesses in response to recent natural disasters and COVID-19. Only those grants and payments that are assessable income will need to be included at this item.

Do not include at this item the following grants and payments:

• cash flow boost payments (COVID-19) (non-assessable, non-exempt income)

If you included the cash flow boost in the gross income for accounting purposes, include it at item 6 – label R Other gross income and at item 7 – label Q Other income not included in assessable income.

• Commonwealth and State government grants and payments that are tax free.

For more information, see Government grants, payments and stimulus during COVID-19 – tax implications.

Write at label Q all assessable government industry payments, including:

• bounties
• employee subsidies
• industry assistance grants including grants relating to R&D
• JobMaker Hiring Credits
• JobKeeper payments (COVID-19)
• Apprentices and Trainees wage subsidy
• fuel tax credits
• producer rebate (wine equalisation tax)
• excise refund scheme for alcohol manufacturers
• product stewardship for oil program benefit.

If this amount includes a fuel tax credit, producer rebate (wine equalisation tax), excise refund scheme for alcohol manufacturers or product stewardship for oil program benefit, print D in the CODE box. For more information on fuel schemes, phone 13 28 66.

JobMaker hiring credit reporting

The accounting basis used determines the way you report JobMaker hiring credit payments.

• Accruals accounting basis – JobMaker hiring credit payments are derived when the company provides the ATO with a valid claim form after each JobMaker period. JobMaker hiring credit payments relating to valid claim forms made during the 2023 income year are assessable in the 2023 income year.
• Cash accounting basis – JobMaker hiring credit payments are derived when the company receives those payments. Payments received during the 2023 income year are assessable in the 2023 income year.

For more information, see:

• TR 2006/3 Income tax: government payments to industry to assist entities (including individuals) to continue, commence or cease business
• Tax treatment of disaster relief payments.

J – Unrealised gains on revaluation of assets to fair value

Write at label J the amount (if any) of any unrealised gains made on the revaluation of assets and liabilities to fair value that may arise as a result of the adoption of Australian equivalents to the international financial reporting standards.

• Include any unrealised gain on the revaluation of a financial arrangement to fair value assessable under the TOFA rules.
• Adjustments for tax purposes are made at item 7 Reconciliation to taxable income or loss.
• An unrealised gain that is not assessable income is included at item 7 – label Q Other income not included in assessable income.
• Any net capital gain for taxation purposes is written at item 7 – label A Net capital gain.
• Any net capital loss is included with any unapplied capital losses carried forward to later income years and is written at item 13 Losses information – label V Net capital losses carried forward to later income years.

R – Other gross income

Other gross income includes:

• royalties
• insurance recoveries
• bad debt recoveries
• life insurance premiums
• non-government subsidies
• assessable non-government assistance from all sources
• profit on sale of depreciating assets (including assets used in R&D activities subject to the R&D tax incentive)
• any assessable gains from the company’s financial arrangements to which the TOFA rules apply, except where they have already been included at item 6
• any extraordinary revenue (that is, revenue or gains from events outside the ordinary operations of the company and not of a recurring nature, including work-in-progress amounts assessable under section 15-50 of the ITAA 1997). An extraordinary gain that is not assessable income is included at item 7 – label Q Other income not included in assessable income.

Write at label R the total amount of other gross income. Do not show at label R amounts you included above at item 6 Income – labels B to J.

If the amount at label R is a loss, print L in the CODE box at the right of the amount.

Record keeping

Keep a record of the following:

• types of income, for example, sales, commissions
• amount derived for each type of income.

If various profit and loss account balances are combined when calculating label R, keep a list of the names and amounts of those accounts.

S – Total income

Write at label S Total income the total of all income items written at item 6 – labels B to R. If this amount is a loss, print L in the CODE box at the right of the amount.

If this amount is greater than zero then complete item 6 Expenses – label X Depreciation expenses for any book depreciation expenses for assets used in deriving that income even if that amount is zero.

Continue to: 6. Expenses