The Australian Taxation Office has published Taxation Determination (TD) 2021/7, Income tax: aggregated turnover - calculating the annual turnover of a connected entity or affiliate with a different accounting period to you. The calculation of aggregated turnover is important in relation to several different tax purposes, including for the determination of an entity as a 'small business entity' for certain tax concessions, for the purpose of temporary loss carry back and full expensing incentives, and others.

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Ruling

1. When working out your aggregated turnover under section 328-115 of the Income Tax Assessment Act 1997, you calculate the annual turnovers of:

• entities connected with you, and
• entities that are affiliates of yours

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.

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).