Taxation Determination TD 2021/7
Date of effect: 13 October 2021




Examples: Example 1: calculating your aggregated turnover where an entity connected with you has a different accounting period to you 4. Company A Ltd needs to calculate its aggregated turnover for an income year to determine if it is eligible to make a loss carry back election. 5. Company A Ltd has an income year of 1 July to 30 June. 6. Company A Ltd identifies Company B Pty Ltd as an entity connected with it at all times during its income year. Company B Pty Ltd has been approved by the Commissioner to adopt a SAP of 1 January to 31 December. 7. Company A Ltd calculates its annual turnover for 1 July to 30 June. In accordance with the aggregation rules, Company A Ltd is also required to include Company B Pty Ltd's annual turnover in its aggregated turnover. 8. Company A Ltd will need to include Company B Pty Ltd's annual turnover for the same 1 July to 30 June period in calculating its aggregated turnover. This is the case even though Company B Pty Ltd has an approved SAP of 1 January to 31 December. 9. Note: In accordance with paragraph 328-115(3)(a), Company A Ltd's aggregated turnover will not include any amounts derived from dealings between Company A Ltd and Company B Pty Ltd during Company A Ltd's income year. Date of effect 10. This Determination applies both before and after its date of issue. However, the Determination will not apply to taxpayers to the extent that it conflicts with the terms of settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 75 to 76 of Taxation Ruling TR 2006/10 Public Rulings). Commissioner of Taxation 13 October 2021 Background 11. An entity's 'aggregated turnover' is relevant to determining whether it meets the requirements of a 'small business entity' for an income year. [6] A small business entity may be able to access a range of tax concessions including capital gains tax, shorter periods of review and exemption from fringe benefits tax for car parking fringe benefits. [7] 12. Other tax incentives, such as temporary loss carry back [8] and temporary full expensing [9] , also rely on testing an entity's aggregated turnover against a threshold as part of their eligibility requirements. The aggregated turnover threshold for these tax incentives is often higher, extending eligibility beyond the small business market. 13. One issue of particular significance for larger businesses and multinationals when testing their eligibility concerns the calculation of the annual turnovers of entities connected with them, or entities that are affiliates of theirs, where those entities have different accounting periods. This Determination sets out the Commissioner's views to support entities in calculating their aggregated turnover in these circumstances. Meaning of aggregated turnover 14. 'Aggregated turnover' is defined in section 328-115 as: 15. Subsection 328-115(1) requires you to determine your aggregated turnover for 'an' income year. Income year 16. Generally, an income year is a period of 12 months beginning on 1 July, unless you have been granted leave by the Commissioner to adopt a SAP. [10] A SAP is a period of 12 months that ends on a date other than 30 June. [11] Relevant income year for annual turnover calculations 17. In determining your aggregated turnover, subsection 328-115(2) requires you to calculate: 18. The income year for which you are calculating your aggregated turnover pursuant to subsection 328-115(1) sets the context for: 19. The relevant income year in considering each of these requirements is that of the individual entity calculating their aggregated turnover (that is, you), not that of any entities connected with it, or that are its affiliates, in the event their income year balances on a different date. 20. The use of the article 'an' in 'an income year' in subsection 328-115(1) is the only time that 'an' precedes the reference to 'income year' in subsections 328-115(1) and (2). In all other circumstances, 'income year' is preceded with 'the'. Therefore, the article 'an' in subsection 328-115(1) serves as a contextual qualifier for the 'income year' from which all subsequent uses of the term 'the income year' in subsection 328-115(2) take context. 21. Subsection 328-115(2) must be read subject to subsection 328-115(3) which sets out the amounts that are excluded from the aggregated turnover calculation. As with subsection 328-115(1), subsection 328-115(3) begins with '[y]our aggregated turnover for an income year', with subsequent references to 'income year' in subsection (3) being preceded with 'the'. It follows that the references to 'income year' in subsection 328-115(3) are to the income year of the entity calculating its aggregated turnover. 22. Reading section 328-115 as a whole, it is clear that your income year is the relevant reference point to ensure your aggregated turnover: © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Previously issued in draft form as TD 2021/D1

Appendix: Background: 11. An entity's 'aggregated turnover' is relevant to determining whether it meets the requirements of a 'small business entity' for an income year. [6] A small business entity may be able to access a range of tax concessions including capital gains tax, shorter periods of review and exemption from fringe benefits tax for car parking fringe benefits. [7] 12. Other tax incentives, such as temporary loss carry back [8] and temporary full expensing [9] , also rely on testing an entity's aggregated turnover against a threshold as part of their eligibility requirements. The aggregated turnover threshold for these tax incentives is often higher, extending eligibility beyond the small business market. 13. One issue of particular significance for larger businesses and multinationals when testing their eligibility concerns the calculation of the annual turnovers of entities connected with them, or entities that are affiliates of theirs, where those entities have different accounting periods. This Determination sets out the Commissioner's views to support entities in calculating their aggregated turnover in these circumstances. | Meaning of aggregated turnover: 14. 'Aggregated turnover' is defined in section 328-115 as: 15. Subsection 328-115(1) requires you to determine your aggregated turnover for 'an' income year. | Income year: 16. Generally, an income year is a period of 12 months beginning on 1 July, unless you have been granted leave by the Commissioner to adopt a SAP. [10] A SAP is a period of 12 months that ends on a date other than 30 June. [11] | Relevant income year for annual turnover calculations: 17. In determining your aggregated turnover, subsection 328-115(2) requires you to calculate: 18. The income year for which you are calculating your aggregated turnover pursuant to subsection 328-115(1) sets the context for: 19. The relevant income year in considering each of these requirements is that of the individual entity calculating their aggregated turnover (that is, you), not that of any entities connected with it, or that are its affiliates, in the event their income year balances on a different date. 20. The use of the article 'an' in 'an income year' in subsection 328-115(1) is the only time that 'an' precedes the reference to 'income year' in subsections 328-115(1) and (2). In all other circumstances, 'income year' is preceded with 'the'. Therefore, the article 'an' in subsection 328-115(1) serves as a contextual qualifier for the 'income year' from which all subsequent uses of the term 'the income year' in subsection 328-115(2) take context. 21. Subsection 328-115(2) must be read subject to subsection 328-115(3) which sets out the amounts that are excluded from the aggregated turnover calculation. As with subsection 328-115(1), subsection 328-115(3) begins with '[y]our aggregated turnover for an income year', with subsequent references to 'income year' in subsection (3) being preceded with 'the'. It follows that the references to 'income year' in subsection 328-115(3) are to the income year of the entity calculating its aggregated turnover. 22. Reading section 328-115 as a whole, it is clear that your income year is the relevant reference point to ensure your aggregated turnover: © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Previously issued in draft form as TD 2021/D1


If this Determination applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Determination. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Determination. | 1. When working out your aggregated turnover under section 328-115 of the Income Tax Assessment Act 1997 [1] , you calculate the annual turnovers [2] of: | for the relevant period that aligns with your income year, even if those entities have a different accounting period to you. | 2. You are required to calculate your aggregated turnover based on your income year, whether that ends on 30 June or some other date - for example, where you have a substituted accounting period (SAP) approved by the Commissioner. | 3. Your aggregated turnover includes your own annual turnover, as well as the annual turnover of any entity (including foreign resident) that is connected with you, or is an affiliate of yours, at any time during your income year. [5] | (1) Your aggregated turnover for an income year is the sum of the relevant annual turnovers (see subsection (2)) excluding any amounts covered by subsection (3). | Note: For small business CGT relief purposes, additional entities may be treated as being connected with you or your affiliate under sections 152-48 and 152-78.


Related rulings: TR 2006/10
Legislative references: ITAA 1997 Div 160 ITAA 1997 328-110 ITAA 1997 328-115 ITAA 1997 328-115(1) ITAA 1997 328-115(2) ITAA 1997 328-115(2)(a) ITAA 1997 328-115(2)(b) ITAA 1997 328-115(2)(c) ITAA 1997 328-115(3) ITAA 1997 328-115(3)(a) ITAA 1997 328-115(3)(b) ITAA 1997 328-115(3)(c) ITAA 1997 328-120 ITAA 1997 328-125 ITAA 1997 328-130 ITAA 1997 995-1(1) ITAA 1936 18 IT(TP)A 1997 Subdiv 40-BB TAA 1953