LodgeiT

In this article:

• What is Item J Total Debt?
• Calculation Method
• Important Notes
• What to do if Total Debt is Negative and Blocking Completion:
• How to Prevent Data from Importing into Item J
• Resources for Further Help

What is Item J Total Debt?

• Item J Total Debt represents the average total debt of a company over 2years.

• It includes current and non-current loans and non-current asset. 

• The figure is automatically calculated based on client financial data and follows ATO guidelines. 

Calculation Method

• The total debt for the income year is calculated by:

  • Adding the opening balance and closing balance of the company’s total debt.

  • Dividing the sum by two to get the average.

• This average includes all financial liabilities that the company uses for operations and investment funding.

Important Notes

• If the amount for Item J appears negative on the tax form, review your account mapping.

  • This might indicate accounts are incorrectly classified (for example, liabilities recorded as assets) in your accounting system.

What to do if Total Debt is Negative and Blocking Completion:

Users cannot manually adjust Item J in LodgeiT if financials are imported because the figure is auto-generated.

2-ways to allow for the company return to be 'valid" is to:

A. Remove the Accounting import connection and manually fill it.

• Make sure form is in "Draft" mode.
• Delete the import of the financials from QuickBooks.
• Manually input the financial information, leaving the Total Debt blank.

B. Update via Accounting source.

• Via Accoutning source, since it is a negative amount, update it from liability to assets . 
• Once done, kindly reimport the financials again. New import will replace the old one. 

Then, you will be able to complete the company return, send it along with the completed financials for signature, and proceed to lodgement and publishing.

How to Prevent Data from Importing into Item J

• To exclude specific accounts from contributing to Item J:

  • Go to the Financials > Accounts section.

  • Tag the relevant accounts with: "Do not import to tax return".

• Marking these accounts stops their data from mapping into the tax form and affecting Item J.

Resources for Further Help

• ATO guidelines on Total Debt

• Account mapping guidance

• How to tag accounts "Do not import to tax return"

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Question: How to calculate the total debt for Section J?

Answer: Calculation of total debt is based on client’s data from financials. It includes Current and Non-current loans and Non-current assets term receivables.

 "Adding the opening and closing balances of the total debt of the company for the income year, and dividing this sum by two." - Its as per the ATO guidelines / formula. Related link  reference.

Note: 

- J Total Debt  is the average of the debts over 2years, it is auto calculated. Including both current and non-current loans, as well as non-current asset term receivables, in line with ATO guidelines.

- If the amounts displayed in the tax form appear negative, please review the account mappingLearn more here

- User cannot manually adjust this section-Item J if you have imported the financials.

FAQ:

Q: Negative amount in item "J" Total Debt

A: If it is a "negative" amount, You have to change it via the accounting system ie 'QuickBooks Online', from liability to assets since it is a negative amount. Once done, kindly reimport the financials.