ATO casts net wide when it comes to taxable business income

Commissions, investment earnings, gratuities and more must be included to be assessed, the office warns.

Frequently forgotten revenue streams such as tips and patent royalties need to be included in the assessable income of a business, the ATO warned in an update.

Commissions, investment earnings, gratuities and compensation payments are all part of assessable income this tax time as well as other more obscure income sources.

Royalties such as payments when other entities use the business’ patent as well as incentives such as cash payments to lease business premises are also included.

Interest on business investments along with interest on overpayment or early payment of tax as well as dividends and franking credits on business investments should also be on the assessable income list.

Rental income from property owned by businesses as well as lease payments and hire charges accrued by hiring out assets also need to find their way to a business’ assessable income.

According to the ATO the tip jar isn’t exempt from being listed either, with tips and gratuities – whether cash or electronic payments – also needing to be listed.

Income that is not necessarily a part of the business’ main function or everyday activities also needs to be included in a business’ assessable income.

Examples of these include disposal of non-trading stock assets, taking some trading stock for your own use and increase in trading stock value.

Businesses that undertake barter transactions such as selling goods and services to receive something other than money in return also need to include the market value of what has been received as payment under assessable income.

Prizes and awards as well as insurance payouts also don’t escape the watchful eye of the ATO with both required to be listed under assessable income.

The pandemic meant the government increased payments and support to a greater number of businesses and individuals.

The payments that are required to be listed under a business’ assessable income include:

Fuel tax credits or product stewardship (oil) benefit
Wine equalisation tax producer rebate
JobKeeper payments (COVID-19)
Supporting apprentices and trainees wage subsidy (COVID-19)
Excise refund scheme for alcohol manufacturers
Grants, such as an amount you receive under the Australian Apprenticeships Incentives Program
Subsidies for carrying on a business
Assessable payments you receive from government entities for services you provided or grants you received

However, some government grants and payments are not required to be included such as cash flow boost payments, and other grants, payments and stimulus provided during COVID-19.

Josh Needs

8 July 2022

accountantsdaily.com.au

Mark Lisle

Mark is our managing partner and has been with the firm for over 36 years. He brings a wealth of experience in all areas of our business, including business advisory, taxation and self managed superannuation.

Mark’s ethos is that good advice stems from working closely with our clients and being prepared to go that extra step to assist them in meeting their goals and optimising their financial position.

Mark is a Fellow of Chartered Accountants Australia and New Zealand, an accredited SMSF Specialist and a registered SMSF auditor.

Outside of work, Mark enjoys trying to keep fit and spending time down at his “second home” in Port Fairy.

Josh Laing

Joshua began working at Rundles in 1999 whilst still completing his Bachelor of Business (Accountancy) degree at RMIT. After graduating in 2001 he was admitted to the Institute of Chartered Accountants Australia and New Zealand in 2004. Joshua spent two years working in London before returning to Rundles in 2006.

Josh has a wealth of knowledge across a broad range of industries as well as in Self Managed Superannuation. Josh enjoys working with family groups and businesses to ensure they’re structured correctly to maximise asset protection, succession planning and management of tax.

Married with 2 children, Josh spends his weekends with his family and following the Tigers.

Brad Roach

Brad has been a part of the Rundles Team since 1996 and became a Partner of the firm in 2014. During his time at Rundles, Brad has developed a strong relationship with his clients across a wide range of industries and is dedicated to assisting them to reach their personal and business goals.

Brad is passionate about seeing his clients succeed and utilises his extensive experience in public practice to provide a holistic service to his clients. He also has a wealth of experience in superannuation, particularly self managed superannuation funds.

In his spare time, Brad likes to play a round of golf with friends and enjoys watching his two sons play various sports.

Peter Davison

Peter graduated from RMIT with a Bachelor of Business (Accountancy) with distinction in 1976. He joined Rundles upon graduating. Peter has been a member of the Institute of Chartered Accountants since 1979 and a Fellow since 1991. As an active yachtie of many years, Peter can often be found on the water. Otherwise, he and his wife spend time with their friends and extended family.

Sandy Gilbert

Sandy was admitted to the Institute of Chartered Accountants in 1973 and has been a Fellow since 1983. He gained extensive experience in auditing and accounting services over seven years at Pannell Kerr Forster before joining Rundles in 1973. Sandy is married with three children. A former amateur footballer of some note, Sandy is still an avid follower of the game and enjoys weekends at his country retreat.