--- name: australia-bookkeeping description: "> Use this skill whenever asked about Australian bookkeeping for sole traders, partnerships, or small companies. Trigger on phrases like \"chart of accounts\", \"BAS\", \"GST codes\", \"bookkeeping\", \"profit and loss\", \"balance sheet\", \"AASB\", \"simplified disclosures\", \"Tier 2\", \"bank reconciliation\", \"expense categories\", \"revenue recognition\", \"depreciation\", \"instant asset write-off\", \"small business pool\", \"ABN\", \"ATO reporting\", \"activity statement\", \"accrual basis\", \"cash basis\", \"general ledger\", or any question about day-to-day transaction recording, financial statement preparation, or account coding for an Australian business." license: AGPL-3.0-or-later (code) / OpenAccountants Guide License v1.0 (content) metadata: source: openaccountants jurisdiction: AU category: bookkeeping quality: source-cited draft openaccountants_url: "https://openaccountants.com/skills/australia-bookkeeping" obligation: BT --- # Australia Bookkeeping Skill v1.0 > **General reference only.** This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction. --- ## Section 1 -- Quick Reference | Field | Value | |---|---| | Country | Australia (Commonwealth of Australia) | | Currency | AUD ($) only | | Financial year | 1 July – 30 June (standard); substituted accounting period available for companies | | Accounting standards | AASB (full IFRS-based); AASB 1060 Simplified Disclosures (Tier 2); Special Purpose for non-reporting entities | | Governing body | Australian Accounting Standards Board (AASB) | | Tax authority | Australian Taxation Office (ATO) | | Key legislation | Corporations Act 2001 (financial reporting Ch.2M); Income Tax Assessment Act 1936/1997; A New Tax System (GST) Act 1999 | | GST registration threshold | $75,000 turnover ($150,000 for non-profits) | | Small business entity threshold | Aggregated turnover < $10 million | | BAS lodgement | Quarterly (most small businesses) or monthly ($20m+ turnover) | --- ## Section 2 -- Standard Chart of Accounts Australian software (Xero, MYOB, QuickBooks) typically uses 3–4 digit codes. The structure below follows common Australian practice. ### Assets (1000–1999) | Code | Account | Type | |---|---|---| | 1000 | Cash on Hand / Petty Cash | Current asset | | 1010 | Business Bank Account | Current asset | | 1020 | Savings Account | Current asset | | 1030 | Term Deposits (< 12 months) | Current asset | | 1050 | Undeposited Funds | Current asset | | 1100 | Accounts Receivable (Trade Debtors) | Current asset | | 1110 | Other Debtors | Current asset | | 1120 | Prepayments | Current asset | | 1150 | GST Receivable (Input Tax Credits) | Current asset | | 1200 | Inventory / Stock on Hand | Current asset | | 1300 | Land | Non-current asset | | 1310 | Buildings | Non-current asset | | 1311 | Accumulated Depreciation — Buildings | Contra asset | | 1320 | Plant and Equipment | Non-current asset | | 1321 | Accumulated Depreciation — Plant & Equipment | Contra asset | | 1330 | Motor Vehicles | Non-current asset | | 1331 | Accumulated Depreciation — Motor Vehicles | Contra asset | | 1340 | Office Equipment | Non-current asset | | 1341 | Accumulated Depreciation — Office Equipment | Contra asset | | 1350 | Computer Equipment | Non-current asset | | 1351 | Accumulated Depreciation — Computer Equipment | Contra asset | | 1360 | Furniture and Fittings | Non-current asset | | 1361 | Accumulated Depreciation — Furniture & Fittings | Contra asset | | 1400 | Small Business Pool | Non-current asset | ### Liabilities (2000–2999) | Code | Account | Type | |---|---|---| | 2000 | Accounts Payable (Trade Creditors) | Current liability | | 2010 | Other Creditors | Current liability | | 2020 | Accrued Expenses | Current liability | | 2050 | GST Payable (Collected) | Current liability | | 2060 | GST Clearing / Control | Current liability | | 2100 | PAYG Withholding Payable | Current liability | | 2110 | Superannuation Payable | Current liability | | 2120 | Provision for Annual Leave | Current liability | | 2130 | Provision for Long Service Leave | Current liability | | 2140 | Provision for Income Tax | Current liability | | 2200 | Credit Card | Current liability | | 2300 | Short-Term Loan (< 12 months) | Current liability | | 2400 | Long-Term Loan (> 12 months) | Non-current liability | | 2410 | Hire Purchase Liability | Non-current liability | | 2500 | Director's Loan Account | Non-current liability | ### Equity (3000–3999) | Code | Account | Type | |---|---|---| | 3000 | Share Capital / Owner's Equity | Equity | | 3010 | Owner's Drawings | Equity | | 3020 | Owner's Contributions | Equity | | 3100 | Retained Earnings | Equity | | 3200 | Current Year Profit/Loss | Equity | | 3300 | Reserves | Equity | ### Revenue (4000–4999) | Code | Account | Type | |---|---|---| | 4000 | Sales Revenue — Taxable (GST 10%) | Revenue | | 4010 | Sales Revenue — GST-Free | Revenue | | 4020 | Sales Revenue — Input Taxed | Revenue | | 4030 | Sales Revenue — Export (GST-Free) | Revenue | | 4100 | Service Revenue | Revenue | | 4200 | Interest Income | Revenue | | 4300 | Rental Income | Revenue | | 4400 | Government Grants / Subsidies | Revenue | | 4500 | Other Income | Revenue | | 4900 | Discount Allowed | Contra revenue | ### Cost of Goods Sold (5000–5999) | Code | Account | Type | |---|---|---| | 5000 | Purchases — Trading Stock | COGS | | 5010 | Purchases — Materials / Components | COGS | | 5020 | Freight Inward | COGS | | 5030 | Direct Labour | COGS | | 5040 | Subcontractor Costs | COGS | | 5100 | Opening Stock Adjustment | COGS | | 5110 | Closing Stock Adjustment | COGS | | 5200 | Import Duty and Customs | COGS | ### Operating Expenses (6000–6999) | Code | Account | Type | |---|---|---| | 6000 | Rent — Business Premises | Expense | | 6010 | Rates and Body Corporate | Expense | | 6020 | Electricity and Gas | Expense | | 6030 | Water | Expense | | 6040 | Insurance — Business | Expense | | 6050 | Repairs and Maintenance | Expense | | 6100 | Wages and Salaries | Expense | | 6110 | Superannuation Guarantee (11.5% from Jul 2025) | Expense | | 6120 | Workers' Compensation Insurance | Expense | | 6130 | Payroll Tax (state-based) | Expense | | 6140 | Staff Training | Expense | | 6200 | Advertising and Marketing | Expense | | 6210 | Website and Hosting | Expense | | 6220 | Printing and Stationery | Expense | | 6230 | Postage and Delivery | Expense | | 6300 | Motor Vehicle — Fuel | Expense | | 6310 | Motor Vehicle — Registration and Insurance | Expense | | 6320 | Motor Vehicle — Repairs | Expense | | 6330 | Travel — Domestic | Expense | | 6340 | Travel — International | Expense | | 6350 | Meals and Entertainment (50% deductible FBT) | Expense | | 6400 | Accounting and Tax Agent Fees | Expense | | 6410 | Legal Fees | Expense | | 6420 | Bank Charges | Expense | | 6430 | Merchant / Payment Processing Fees | Expense | | 6440 | Interest Expense | Expense | | 6500 | Telephone and Internet | Expense | | 6510 | Software Subscriptions (SaaS) | Expense | | 6520 | Professional Subscriptions and Memberships | Expense | | 6600 | Depreciation — Buildings | Expense | | 6610 | Depreciation — Plant and Equipment | Expense | | 6620 | Depreciation — Motor Vehicles | Expense | | 6630 | Depreciation — Office/Computer Equipment | Expense | | 6700 | Bad Debts Written Off | Expense | | 6800 | General and Sundry Expenses | Expense | ### Other Income / Expenses (7000–7999) | Code | Account | Type | |---|---|---| | 7000 | Gain on Sale of Assets | Other income | | 7010 | Loss on Sale of Assets | Other expense | | 7020 | Foreign Exchange Gain/Loss | Other income/expense | | 7100 | Extraordinary Items | Other expense | ### Tax (8000–8999) | Code | Account | Type | |---|---|---| | 8000 | Income Tax Expense | Tax | | 8010 | Deferred Tax Liability | Tax | | 8020 | Deferred Tax Asset | Tax | --- ## Section 3 -- Revenue Recognition ### Cash vs Accrual Rules | Criterion | Cash Basis (Sole Traders / Small Business) | Accruals Basis | |---|---|---| | Eligibility | Aggregated turnover < $10m (small business entity) | All entities; mandatory for reporting entities | | Income recognised | When cash received | When earned (invoice raised or goods delivered) | | Expenses recognised | When cash paid | When incurred (liability arises) | | Trading stock | Simplified: exempt from stock-take if change < $5,000 | Required: opening/closing stock adjustments | | Prepaid expenses | Immediate deduction if < 12 months and under $1,000 or business turnover < $10m | Spread over benefit period | ### AASB 15 Revenue from Contracts with Customers Applies to reporting entities using Tier 1/Tier 2. Five-step model: 1. Identify contract 2. Identify performance obligations 3. Determine transaction price 4. Allocate price to obligations 5. Recognise when obligation satisfied Small businesses using simplified reporting typically recognise on delivery/completion. --- ## Section 4 -- Expense Classification ### ATO Individual Tax Return Categories (Sole Trader — Business Schedule) | Item | Category | Nominal Codes | |---|---|---| | A | All other business income | 4000–4500 | | B | Cost of sales | 5000–5200 | | C | Contractors and commission | 5040 | | D | Superannuation | 6110 | | E | Bad debts | 6700 | | F | Lease expense (plant/equipment) | 6000 | | G | Interest expense — Australia | 6440 | | H | Depreciation (excluding SB pool) | 6600–6630 | | I | Motor vehicle expenses | 6300–6320 | | J | Repairs and maintenance | 6050 | | K | All other expenses | 6000–6800 (remainder) | ### Non-Deductible Expenses (ATO) - Entertainment (not subject to FBT election) — non-deductible portion - Capital expenditure — must be depreciated or written off via SB pool - Private portion of mixed expenses — must be apportioned - Fines and penalties — not deductible - Clothing (non-compulsory, non-protective) — not deductible - Traffic infringements — not deductible ### GST Classification for BAS | GST Code | Description | BAS Label | |---|---|---| | GST (10%) | Standard taxable supply | G1, 1A | | GST-Free | Food (basic), medical, education, exports | G1 (no 1A) | | Input Taxed | Financial supplies, residential rent | G1 (no credit) | | BAS Excluded | Wages, drawings, loan principal, private | Not reported | | No ABN Withholding | Payments to suppliers without ABN (49% w/h) | Separate | --- ## Section 5 -- Asset vs Expense Thresholds ### Instant Asset Write-Off (IAWO) | Period | Threshold | Eligibility | |---|---|---| | 1 Jul 2023 – 30 Jun 2026 | < $20,000 per asset | Aggregated turnover < $10m, using simplified depreciation | | Permanent (from 1 Jul 2026) | < $20,000 per asset | Announced in 2026 Budget — made permanent | ### Small Business Pool (Simplified Depreciation) | Pool | Rate | Notes | |---|---|---| | Year 1 (first use) | 15% | On cost (or adjustable value if added later) | | Subsequent years | 30% | On opening pool balance | | Pool balance < IAWO threshold | Write off entire pool | End-of-year check | ### General (Non-SB) Depreciation | Method | Application | |---|---| | Diminishing value | rate = days held ÷ 365 × (200% ÷ effective life) | | Prime cost (straight-line) | rate = days held ÷ 365 × (100% ÷ effective life) | ### Common Effective Lives (ATO TR 2025/1 basis) | Asset | Effective Life | DV Rate | PC Rate | |---|---|---|---| | Desktop computers | 4 years | 50% | 25% | | Laptops | 4 years | 50% | 25% | | Printers/Scanners | 5 years | 40% | 20% | | Office furniture | 10 years | 20% | 10% | | Motor vehicles | 8 years | 25% | 12.5% | | Air conditioning | 10 years | 20% | 10% | | Buildings (general) | 40 years | 5% | 2.5% | ### Car Limit For 2025–26, the car cost limit for depreciation purposes is $69,674. Only the business-use portion of this amount can be depreciated. --- ## Section 6 -- P&L Format ### Income Statement (AASB Simplified / Tier 2) ``` STATEMENT OF PROFIT OR LOSS For the year ended 30 June 20XX $ $ Revenue xxx Cost of sales (xxx) ──── Gross profit xxx Other income xxx Expenses: Employee benefits expense (xxx) Depreciation and amortisation (xxx) Finance costs (xxx) Other expenses (xxx) (xxx) ──── Profit before income tax xxx Income tax expense (xxx) ──── Profit for the year xxx ════ ``` ### Sole Trader — ATO Business Schedule Format ``` BUSINESS INCOME Gross payments subject to withholding xxx All other business income xxx TOTAL BUSINESS INCOME xxx BUSINESS EXPENSES Cost of sales (xxx) Contractor/subcontractor/commission (xxx) Superannuation expenses (xxx) Bad debts (xxx) Lease expenses within Australia (xxx) Interest expenses within Australia (xxx) Depreciation expenses (xxx) Motor vehicle expenses (xxx) Repairs and maintenance (xxx) All other expenses (xxx) TOTAL BUSINESS EXPENSES (xxx) NET INCOME OR LOSS FROM BUSINESS xxx ``` --- ## Section 7 -- Balance Sheet Format ### Statement of Financial Position (Vertical — AASB Tier 2) ``` STATEMENT OF FINANCIAL POSITION As at 30 June 20XX $ $ CURRENT ASSETS Cash and cash equivalents xxx Trade and other receivables xxx Inventories xxx Other current assets xxx ──── Total current assets xxx NON-CURRENT ASSETS Property, plant and equipment xxx Intangible assets xxx Other non-current assets xxx ──── Total non-current assets xxx ──── TOTAL ASSETS xxx ════ CURRENT LIABILITIES Trade and other payables xxx Current tax liabilities xxx Provisions (annual leave, etc.) xxx Short-term borrowings xxx ──── Total current liabilities xxx NON-CURRENT LIABILITIES Long-term borrowings xxx Provisions (long service leave) xxx ──── Total non-current liabilities xxx ──── TOTAL LIABILITIES xxx ════ NET ASSETS xxx ════ EQUITY Issued capital xxx Retained earnings xxx Reserves xxx ──── TOTAL EQUITY xxx ════ ``` --- ## Section 8 -- Bank Reconciliation Patterns ### Common Australian Bank Formats | Bank | Export Format | Key Fields | |---|---|---| | Commonwealth Bank (CBA) | CSV, OFX, QIF | Date, Amount, Description, Balance | | ANZ | CSV, OFX | Date, Description, Amount, Type | | Westpac | CSV, OFX, QIF | Date, Narration, Debit, Credit, Balance | | NAB | CSV, OFX | Date, Narration, Amount, Type, Balance | | Macquarie | CSV | Date, Description, Amount, Balance | | Bendigo Bank | CSV, OFX | Date, Description, Debit, Credit, Balance | | Up Bank / Neobanks | CSV | Date, Description, Amount, Category | ### Common Transaction Descriptions | Pattern | Likely Classification | |---|---| | DIRECT CREDIT, BPAY CREDIT | Income — customer payment | | EFTPOS, VISA PURCHASE, DEBIT CARD | Expense — check merchant | | DIRECT DEBIT, D/D | Regular expense (insurance, subscription, utility) | | BPAY | Expense — bill payment (utilities, ATO, rates) | | TRANSFER, INT TFR | Internal transfer or payment — check counterparty | | ATM WITHDRAWAL | Drawings (sole trader) or petty cash replenishment | | INTEREST CHARGED | Interest expense (6440) | | INTEREST PAID | Interest income (4200) | | ATO PAYMENT, ATO IAS, ATO BAS | Tax payment — not a P&L expense | | PAYROLL, WAGES | Staff costs (6100) | | SUPER STREAM, SUPER CLEARING | Superannuation (6110) | | XERO, STRIPE, SQUARE PAYOUT | Platform payout — match to invoices | --- ## Section 9 -- Micro-Entity / Small Business Simplifications ### Small Business Entity Concessions (turnover < $10m) | Concession | Detail | |---|---| | Simplified depreciation | Instant write-off < $20,000; pool balance at 15%/30% | | Simplified trading stock | No stock-take if estimate change ≤ $5,000 | | Prepaid expenses | Immediate deduction if < 12 months and service period ends before next year | | Simpler BAS | Report only G1, 1A, 1B (no G2, G3, G10, G11) | | Two-year amendment period | ATO can only amend assessments within 2 years (not 4) | | Cash accounting for GST | Report GST when paid/received, not invoiced | | PAYG instalments | Option to pay quarterly amount the ATO calculates | ### Reporting Tiers | Tier | Who | Standards | Required Statements | |---|---|---|---| | Tier 1 (Full AASB / IFRS) | Large proprietary companies, public companies, registered schemes | Full recognition + full disclosure | All 5 statements + notes | | Tier 2 (AASB 1060 Simplified) | Non-publicly accountable entities electing Tier 2 | Full recognition, reduced disclosure | All 5 statements + reduced notes | | Special Purpose (legacy) | Non-reporting entities (winding down) | Flexible | Varies (being phased out by 30 Jun 2023 for large) | | No statutory reporting | Sole traders, small partnerships (non-company) | None mandated | Prepare for ATO/tax purposes only | ### Large Proprietary Thresholds (must be reporting entity) Meet 2 of 3: Revenue ≥ $50m, assets ≥ $25m, employees ≥ 100. --- ## Section 10 -- Interaction with Tax Skills ### Income Tax Return - Sole traders: business schedule in individual return (myTax or tax agent) - Companies: Company Tax Return (form with labels mapped to financial statements) - Tax rate: individuals at marginal rates; companies at 25% (base rate entity, turnover < $50m) or 30% - Franking: company tax paid generates franking credits for shareholder dividends - Losses: carried forward indefinitely, subject to continuity of ownership test (companies) or non-commercial loss rules (individuals) ### BAS / GST Return | BAS Label | Description | CoA Mapping | |---|---|---| | G1 | Total sales (incl. GST-free and input taxed) | 4000–4500 | | 1A | GST on sales | 2050 | | 1B | GST on purchases (Input Tax Credits) | 1150 | | W1 | Total salary/wages and other payments | 6100 | | W2 | Amounts withheld from payments (PAYG-W) | 2100 | | T1 | PAYG instalment income | 4000–4500 | | T2 | PAYG instalment raised | 2140 | ### Superannuation Guarantee - Rate: 11.5% of ordinary time earnings (from 1 Jul 2025); rising to 12% from 1 Jul 2026 - Due: 28 days after end of quarter - Nominal: 6110 (expense) / 2110 (payable) - SG Charge: if late, lose deduction and pay additional penalties ### Fringe Benefits Tax (FBT) - FBT year: 1 April – 31 March - Rate: 47% (top marginal + Medicare levy) - Common items: car fringe benefit, entertainment, loan fringe benefit - Meals/entertainment: 50/50 method available — 50% deductible for income tax, 50% subject to FBT --- ## Disclaimer This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional (such as a CPA, CA, registered tax agent, or equivalent licensed practitioner in your jurisdiction) before filing or acting upon. --- _Source: [OpenAccountants](https://openaccountants.com/skills/australia-bookkeeping) — open tax Guides for AI, reviewed by named CPAs/CAs/EAs. Quality: **source-cited draft**. For always-current figures and named-accountant backing, connect the OpenAccountants MCP server (`openaccountants-mcp`)._