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Applying for a substituted accounting period (SAP)

How to apply for a substituted accounting period (SAP) or to change back to a normal accounting period ending 30 June.

Last updated 5 September 2022

Overview

Use the Application for a substituted accounting period (NAT 5087) form to apply to:

  • adopt an accounting period ending on a date other than 30 June, or
  • revert to a standard accounting period ending 30 June.

Completing the form

Complete the form electronically. Questions specific to your circumstances will appear based on your answers. The form also instructs you to attach additional information with your application to ensure it can be properly considered and processed in a timely manner.

The application must be lodged and signed by either:

  • the entity’s registered tax agent
  • the public officer
  • a partner of the entity if the entity is a partnership
  • the trustee of a trust if the entity is a trust. If the trustee is a company, the public officer of the trustee company.

The person signing the declaration must be authorised to act for your company. Ensure that they have registered their name and position with us. Find out how to update your details.

You can lodge your application either:

  • via Online services for agents or Online services for business    
    • when sending a new message, categorise the message as:
      Topic name – Income tax
      Subject – Substituted Accounting Period (SAP)
    • attach the saved PDF form and supporting information.
     
  • by post to

    Australian Taxation Office
    PO Box 3000
    PENRITH NSW 2740.

We may contact you if further information is required to process your SAP application. We aim to communicate the outcome to you in writing within 28 days of receiving your application.

Find out more about the personal information we collect from you.

Detailed instructions

Reason for a SAP and supporting evidence

Law Administration Practice Statement PS LA 2007/21 Substituted Accounting Periods provides comprehensive guidance on the circumstances which warrant the granting of a SAP.

SAPS are granted where the entity can demonstrate its circumstances take the case out of the ordinary run.

These circumstances may include:

  • the need to synchronise your balance dates with the controlling entity of your economic group or the entity that holds the majority of your membership interests
  • the wish to align your balance date with the income tax consolidated group you have just exited because your accounting systems are already set up to meet the former income tax consolidated group’s reporting requirements and it will be too costly to adjust your systems to a new balance date
  • an ongoing event, industry practice, business driver or other ongoing circumstance that makes 30 June impractical as a basis to calculate taxable income. This would include difficulties with ascertaining inventory for stock valuations, and having multiple financial reporting requirements (for example, a franchise to a franchisee).

Circumstances generally not outside the ordinary run include:

  • strata or owners corporations wishing to align their balance date with their audit date
  • companies wishing to align their balance date with a change of company financial year election sent to the Australian Securities & Investment Commission.

It is not envisaged that the circumstances of individuals would fall outside the ordinary run.

Subsidiary members of income tax consolidated groups do not need to apply for a SAP as they do not have income tax reporting obligations.

Lodging the form on time

A SAP application should be lodged as soon as possible. To ensure the lodgment date can be updated in ATO systems before it passes, a SAP application should be lodged at least 28 days before the earlier of either:

  • the due date for lodgment of the income tax return for the current accounting period
  • the due date for lodgment of the tax return for the proposed new accounting period.

Retrospective or out of date applications may be accepted in limited circumstances. See PS LA 2007/21 for more information.

Transitional periods – examples

Where an entity is allowed to adopt a SAP there is a change to the end date of its accounting period, which results in a transitional period of more or less than 12 months.

The application form automatically calculates the end of the transitional period.

First time lodgers

For entities that adopt a SAP for their first lodgment of an income tax return, the transitional period will:

  • begin on the date the entity commenced trading
  • end on the first occurrence of the SAP balance date.

The transitional period for a new entity must be 12 months or less.

Example: First time lodger requesting a 31 December balance date

Entity A commenced trading on 1 January 2022 and requests a 31 December balance date.

Its transitional year will be from 1 January 2022 to 31 December 2022 (12 months). This will constitute the 2023 tax year.

End of example

Example: First time lodger requesting a 31 October balance date

Entity B commenced trading on 27 September 2021 and requests a 31 October balance date.

Its transitional year will be from 27 September 2021 to 31 October 2021 (one month). This will constitute the 2021 tax year.

End of example

Existing entities

For existing entities that have lodged previous income tax returns, the length of the transitional period is determined by the table in paragraph 4F of PS LA 2007/21.

The application form automatically calculates the end of the transitional period when you enter the prompted dates and tick the relevant box describing your entity’s transition on the application form.

Example: Entity moving from a 30 June balance date to a 31  December balance date (early balancer)

Entity A balances on 30 June 2022 and requests a 31 December balance date (on the application form at Question 13 select: "A current balance date between 31 January – 30 September (inclusive) to a new balance date of 31 December").

Its transitional year will be from 1 July 2022 to 31 December 2022 (6 months), constituting the 2023 tax year.

End of example

Example: Entity moving from a 31 March balance date to a 30 September balance date (late balancer)

Entity B balances on 31 March 2021 and requests a 30 September balance date (on the application form at Question 13 select: "All other transitions").

Its transitional year will be from 1 April 2021 to 30 September 2022 (18 months), constituting the 2022 tax year.

End of example

Example: Entity moving from a 31 October balance date to a 31 December balance date (entity 'misses' a year - early balancer)

Entity D balances on 31 October 2021 and requests a 31 December balance date (on the application form at Question 13 select: "All other transitions").

This would ordinarily result in a 2-month transitional period, which is acknowledged by the Commissioner of Taxation as an inconveniently short transitional period.

Per paragraph 4G of PS LA 2007/21, its transitional year will instead be from 1 November 2021 to 31 December 2022, constituting the 2023 tax year. It will therefore ‘skip’ the 2022 income year.

End of example

Entities exiting consolidated groups

Entities exiting income tax consolidated groups retain the balance date that they had before entering the income tax consolidated group. As such, the table in paragraph 4F of PS LA 2007/21 applies based on their prior balance date.

If an entity exiting an income tax consolidated group seeks to lodge for a period from their date of exit until their requested SAP, the transitional period may occur while the entity remains in the income tax consolidated group. As the entity does not have income tax obligations at this time, the SAP will only come into effect on exit. The following 2 examples demonstrate this.

Example: Entity exiting a consolidated group (early balancer)

Entity A balances on 30 June prior to entering an income tax consolidated group. It exits the income tax consolidated group on 23 May 2018. It subsequently requests a 31 December balance date.

Ordinarily, applying the table in PSLA 2007/21, Entity A is required to lodge a return as a standalone entity for the period from 23 May 2018 to 30 June 2018, constituting the 2018 tax year. It would then lodge a return for the transitional period from 1 July 2018 to 31 December 2018, constituting the 2019 tax year. This is because a transitional period of 6 months applies when moving from a 30 June to a 31 December balance date.

Entity A however wishes to lodge for a period from 23 May 2018 to 31 December 2018. To accommodate this, Entity A requests a transitional period of 1 July 2017 to 31 December 2017. The following tax year for Entity A is from 1 January 2018 to 31 December 2018, constituting the 2019 tax year.

A granting of this SAP ensures that when Entity A exits the income tax consolidated group, its first tax return as a standalone entity is for its requested period. This period effectively commences on exit of the income tax consolidated group on 23 May 2018 (being the day it resumes its income tax obligations) up to its requested SAP of 31 December 2018.This constitutes its 2019 tax year.

End of example

Example: Entity exiting a consolidated group (late balancer)

Entity B balances on 30 June prior to entering an income tax consolidated group. The group balances on 30 November. When Entity B leaves the group on 1 June 2018, it retains its 30 June balance date. Entity B then requests a 30 November balance date as its systems are currently set up to report on that basis.

The table in PSLA 2007/21 states that there is a 17-months transitional period when moving from a 30 June balance date to a 30 November balance date. There are 2 options available to Entity B, that can either:

  1. lodge a 2018 return for the period ending 30 June 2018 (consisting of one month) as this is its current balance date, before implementing a 17-months transitional period from 1 July 2018 to 30 November 2019, constituting the 2019 year; or
  2. request a transitional period from 1 July 2017 (while Entity B is in the income tax consolidated group) to 30 November 2018, constituting the 2018 year. This gives Entity B an effective reporting period of 1 June 2018 to 30 November 2018 for the 2018 tax year.
End of example

Find information for taxpayers with a substituted accounting periods.

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