An Adding Back is a tax adjustment used to remove accounting expenses or income that are not treated the same way for tax purposes.

✔ Add Backs are tax adjustments
✔ They remove accounting amounts that don’t apply for tax
✔ They prevent incorrect or duplicated claims
✔ LodgeiT is replacing, not duplicating, amounts


LodgeiT starts with the accounting profit (from the Profit & Loss) and then applies add backs and deductions to arrive at the taxable income.


TABLE OF CONTENTS

Why LodgeiT adds back amounts

Some items shown in the Profit & Loss are:

  • Not deductible for tax, or
  • Calculated differently under tax law

Common Add Backs

1. Depreciation (most common)

  • Depreciation in the P&L is accounting depreciation.
  • This must be added back because it’s not deductible for tax.
  • LodgeiT then applies the correct tax depreciation (e.g. small business depreciation).
  • Result: only tax depreciation is claimed.


2. Profit or loss on sale of assets

  • Accounting profit/loss is added back.
  • LodgeiT recalculates the correct tax outcome using depreciation rules.

Why it can look like amounts are duplicated

You may see:

  • An expense in the P&L, and
  • The same amount added back, and
  • A separate tax deduction

This is expected.

The accounting amount is removed, then replaced with the correct tax treatment.

Where to see Add Backs in LodgeiT

You can find Add Backs in:

  • Tax Reconciliation / Adjustments section
  • Labels such as:

- “Depreciation per P&L”

- “Profit on sale of assets”

- “Non-deductible expenses”

How to check if Add Backs are correct

1. Compare:

  • Profit & Loss
  • Tax Reconciliation

2. Confirm:

  • P&L depreciation is fully added back
  • Only tax depreciation remains as a deduction

3. Review:

  • Asset register and disposal entries
  • Small business depreciation eligibility

To correct the process

  1. Adds back the accounting amount, then
  2. Applies the correct tax treatment separately

This ensures compliance with ATO tax rules.


Key takeaway

✔ Add backs are normal and required

✔ They prevent incorrect tax claims

✔ LodgeiT is adjusting, not double-counting


If you have concerns about a specific amount, reviewing the Tax Reconciliation will show how the adjustment is applied.