Speed
0.75×
1×
1.25×
1.5×
2×
16 min 38 sec
0:00
Opening
0:29
Items 11 and 12
1:02
Item 13: Losses carried forward
2:08
Item 14: Personal services income
4:15
Items 15 to 19: specialised companies
4:41
Item 20: Foreign income tax offset
5:03
Items 21 to 24: research and development, and other offsets
5:43
Item 25: Reportable tax position
6:00
Items 26 to 30: International dealings
7:06
The schedules
8:18
The tax rate
9:13
Calculation statement: from taxable income to tax payable
10:26
Calculation statement: credits, instalments and the amount due
11:28
Worked example: Saltbush's calculation statement
11:57
Lodging and paying
13:37
Finalise, lock and lodge
14:52
Before you lodge: what Step 1 checked, and what it can't
16:07
Close
The Company Tax Return, Explained
·
Step 2: the return
·
Episode 7
Items 11 to 30, the schedules, and the calculation statement
The remaining items, the schedules, the tax rate and the calculation statement from taxable income to the amount due. Then finalising, locking and lodging, with what Step 1 checked and what it can’t.
calculation statement
tax offsets
pay as you go instalments
lodging
schedules
Do it in Beeswax
Tax Returns
↗
Transcript
0:00
This film finishes the return: items 11 to 30, most of which a small company leaves blank; the schedules that some answers require; and the calculation statement, which turns taxable income into the amount payable or refundable.
0:15
It ends with a checklist for before you lodge. A small company needs chapters 2, 3, 8, 9, and 10 to 16. As before, this is general information, not tax advice. Consolidation deductions, item 11, is for the head company of a consolidated group.
0:34
It reports deductions under the consolidation rules for rights to future income, consumable stores and work in progress, for entities that joined on or after 31 March 2011.
0:46
National Rental Affordability Scheme tax offset, item 12. It needs a certificate from the Department of Social Services, and it's refundable, so it's also included among the refundable offsets in the calculation statement.
1:02
Tax losses carried forward to later income years, label U. Net capital losses carried forward to later income years, label V. The two are kept apart because a net capital loss can only reduce capital gains; it can't be deducted from other income.
1:18
A losses schedule must be attached if U plus V is more than 100,000 dollars. It's also needed in other cases, for example when the company relies on the business continuity test to use a loss, or deducts more than 100,000 dollars of losses in the year.
1:34
A company with a loss year shows zero taxable income in the calculation statement. The loss appears here. A company can also show taxable income and still carry a loss forward, where excess franking offsets were converted to a loss, as in Film 6.
1:50
And from 2026–27, as Film 5 explained, a loss can instead be carried back against tax already paid. Saltbush has no losses, so item 13 is blank. In Beeswax: item 13 shows labels U and V.
2:08
Item 14 matters to most one-person consulting companies. Personal services income is income that's mainly a reward for an individual's personal efforts or skills.
2:18
The test is per contract: if more than half the payment is for the individual's work, the contract's income is all personal services income. If the company earns it outside a personal services business and doesn't pay it promptly to the individual as salary, the net amount is attributed to the individual and taxed to them.
2:37
Some expenses also become non-deductible. The item 7 adjustments are at add-back W and subtraction Q. The labels: Does your income include an individual's personal services income, label N.
2:51
Answer Yes whenever it does, even if the company passes the tests. A Yes isn't a bad answer. No ends the item. Personal services income and deductions, labels A and B, are the amounts in item 6, including income earned in a personal services business.
3:08
Results test, label C: at least 75 per cent of the income is for producing a result, the company supplies its own equipment, and it's liable to fix defects. Personal services business determination, label D: whether the company holds one.
3:24
The other tests, E1 to E3: unrelated clients, employment, and business premises. They can't be self-assessed if 80 per cent or more of the income comes from one client and its associates; then only the results test or a determination helps.
3:40
Passing the tests isn't the end of it. The Australian Taxation Office, the ATO, says in its guideline P C G twenty twenty-five slash five that a company that passes can still face the anti-avoidance rules if it retains profits or splits income in ways the guideline treats as high risk.
3:57
Saltbush answers No at N: its fees are earned by a team, and no contract is mainly for one person's work. If the director took on an engagement done mainly in person, that contract's income would be personal services income, and the answer would be Yes.
4:14
These items apply only to particular kinds of company: Item 15: licensed clubs, the percentage of non-member income. Item 16: life insurance companies and friendly societies.
4:27
Item 18: pooled development funds. Item 19: retirement savings account providers. There is no item 17. The form goes from 16 to 18. Foreign income tax offset, label J.
4:44
Where the company paid foreign tax on income that's also taxed in Australia, the offset is the lesser of the foreign tax paid and a limit. The limit is the greater of 1,000 dollars and an amount worked out under the law.
4:58
Excess foreign tax can't be carried forward. Item 21 is the research and development, R and D, tax incentive. It needs at least 20,000 dollars of eligible spending, with some exceptions, and an R and D schedule.
5:14
A company with aggregated turnover under 20 million dollars gets a refundable offset: its tax rate plus 18.5 percentage points. Larger companies get a non-refundable offset, with any unused amount carried forward.
5:29
Items 22 and 23 are offsets for investing in early stage venture capital limited partnerships and early stage innovation companies. Item 24 is the digital games tax offset.
5:43
Are you required to lodge a reportable tax position schedule, label B. That applies to a full-year return with total business income of 250 million dollars or more, or 25 million dollars or more within an economic group of that size.
6:00
Every company must answer items 26 to 30. Item 26: any dealings with international related parties. Item 27: whether they total more than 2 million dollars. Transactions aren't netted: a 600,000-dollar purchase and a 700,000-dollar sale are 1.3 million.
6:21
Item 28: branch operations here or overseas, or interests in foreign companies or trusts. Item 29: whether the thin capitalisation or debt deduction creation rules apply.
6:34
Item 30: whether money or property went to or came from one of 45 specified countries, or the company controls assets there. A Yes at 27, 28 or 29 requires an international dealings schedule.
6:49
A Yes at 26 or 30 doesn't, on its own. Item 30 surprises people. The list includes Singapore, Hong Kong, Ireland, the Netherlands, Switzerland and Luxembourg. An ordinary payment to a Singapore supplier is a Yes.
7:05
The return can require several schedules. A return lodged without one it needs may not count as lodged. Losses schedule: losses carried forward over 100,000 dollars, among other triggers.
7:19
Capital gains tax, CGT, schedule: capital gains, or capital losses, for the year over 10,000 dollars. International dealings schedule: a Yes at 27, 28 or 29, or an amount at item 6 overseas interest or overseas royalties, or at the item 7 section 46FA subtraction.
7:42
R and D schedule: an R and D offset claimed. Reportable tax position schedule: a Yes at item 25. Dividend and interest schedule: dividends, or interest, paid to investors.
7:56
Two more apply to particular income: a trust income schedule for trust distributions, and a payment summary schedule for amounts withheld from payments to the company, for example because it didn't quote its Australian business number.
8:08
Saltbush attaches two: a CGT schedule for its 12,000-dollar gain, and a dividend and interest schedule for its dividend. A base rate entity pays 25 per cent for 2025–26.
8:23
Most other companies pay 30. Some companies have their own rates, for example life insurers, pooled development funds and not-for-profit companies. Two points catch people out.
8:34
Base rate entity status uses this year's turnover. Last year's is irrelevant, unlike the small business entity test. The franking rate uses last year's figures, as covered in Film 6.
8:45
The ATO says it sees many returns with base rate entity status applied incorrectly. Some history on the company tax rate: it peaked at 49 per cent in the late 1980s and, after several cuts and one rise, has been 30 per cent since 2001.
9:02
A lower rate for smaller companies began at 28.5 per cent in 2015–16 and reached 25 per cent from 2021–22. On paper and in Beeswax, the calculation statement is the same column of labels.
9:18
It's worked down that column. Taxable or net income, label A, from item 7. Zero if item 7 shows a loss. Tax on taxable or net income, label T1, at the company's rate.
9:32
Gross tax, label B, is the same for almost every company. Then four kinds of tax offset, in a fixed order: Non-refundable, non-carry-forward offsets, label C, such as franking credits received and the foreign income tax offset.
9:47
Any excess is lost as an offset, although excess franking credits become a tax loss, as in Film 6. Non-refundable carry-forward offsets, label D, such as the non-refundable R and D offset.
10:00
Any excess carries forward. Refundable offsets, label E, such as the refundable R and D offset. Any excess is refunded. Franking deficit tax offset, label F. Any excess carries forward.
10:14
Subtotals T2, T3 and T4 follow each offset and never go below zero. The result is tax payable, label T5. From tax payable, the statement reaches the amount due: Section 102AAM interest charge, label G, adds an interest charge on certain distributions from non-resident trusts.
10:38
Eligible credits, label H, subtracts tax already withheld from the company's income. For example, H3 is tax withheld because the company didn't quote its Australian business number.
10:50
There's no H1 or H6 on the 2026 form. Tax offset refunds, label I, subtracts the refundable offsets that tax payable didn't use. Pay as you go, PAYG, instalments raised, label K, subtracts the instalments on the company's activity statements for the year.
11:10
Lodge every activity statement before the return. The result is amount due or refundable, label S. Positive is payable; negative is a refund. The ATO also uses these figures to set next year's PAYG instalment rate.
11:27
Saltbush, from Film 5: Taxable income: 188,850 dollars. Tax at 25 per cent: 47,212 dollars and 50 cents. No offsets, so tax payable is the same. No credits. PAYG instalments raised on its activity statements: 36,000 dollars.
11:51
Amount due: 11,212 dollars and 50 cents. For the 2026 return, with a 30 June year end, the date depends on who lodges. A company with a return still outstanding from an earlier year lodges by 31 October 2026.
12:10
A small company preparing its own return lodges and pays by 28 February 2027. Most small companies using a registered tax agent lodge and pay by 15 May 2027, or by 31 March if total income was over 2 million dollars in the latest year lodged.
12:29
The company must be on the agent's list by 31 October for those dates to apply. Large and medium agent clients whose last return was taxable lodge by 31 January, but pay by 1 December 2026.
12:41
1 December is the payment date in the law. For most small companies, the lodgment program moves it to the lodgment date. A due date on a weekend or public holiday moves to the next business day, so several of these fall on a Monday.
12:57
A company can't lodge through the ATO's Online services for business. It lodges through a registered tax agent, through software built on standard business reporting, or on paper.
13:08
The return is signed by the company's public officer, who declares it true and correct. A tax agent adds their own declaration. Saltbush uses an agent, and its total income in 2024–25 was under 2 million dollars, so it lodges and pays by Monday 17 May 2027.
13:26
That's also the date on its Step 1 Key dates card, which works it out mainly from one answer: whether the return goes through a tax agent. In Beeswax, the return is signed off in three moves, each made by a person: two on the return's page and one in Step 1.
13:45
Confirm each section. The dialog asks you to confirm you've reviewed it and that its figures are correct. Finalise the return. This needs every section confirmed and no red check left unaccepted in Step 1.
13:58
If a red check is still unaccepted, Finalise links back to the review instead. Finalising records you as the return's reviewer and locks it against edits. Lock FY2026, back in Step 1, moves the books' lock date to 30 June, once every check is reviewed.
14:16
Claude and the application programming interface, the API, can read the return, change its figures and add notes. They can't confirm, finalise or unlock it. Finalising isn't lodging.
14:29
In Beeswax's own words, "Finalising does not lodge it with the Australian Taxation Office." The paper's last page holds the declarations that lodging needs: the company's public officer declares the return true and correct, and a tax agent who prepares it adds their own.
14:45
The return is then lodged through the agent or software built on standard business reporting. By the time the return is finalised, Step 1 has checked a lot of the old pre-lodgment list: activity statements lodged and locked, so the GST and withholding figures are final; super owed at 30 June, and whether it was paid by 28 July; entertainment and fines flagged for item 7; shareholder loans decided: repaid, or under a written agreement; long-overdue debts decided: still expected to be paid, or written off before 30 June; debtors and creditors agreeing to the ledger.
15:25
What it can't check is judgement, and the return's own labels: base rate entity status: turnover under 50 million dollars, and passive income no more than 80 per cent; the franking rate, worked out from last year's figures; depreciation: each asset under 20,000 dollars, and item 10 agreeing to item 6; items 26 to 30, all answered, with the item 30 country list checked; schedules attached where triggered, such as a capital gain over 10,000 dollars, or a dividend paid; the amounts behind each flag: Step 1 says where to look; the figure is still the preparer's.
16:06
That's the whole year end: the books reviewed in Step 1, then the return in Step 2: the company's details, the profit and loss, the reconciliation to taxable income, the information statement, and the calculation of tax, signed off and ready to lodge.
16:22
Every figure here is for the 2026 return. Rates, thresholds and dates change, and some already have for 2026–27. Check the current year's instructions, and the course's "what's changed" page, before you rely on them.