Income - salary/wages and profits are captured slightly differently for the IPP to produce a Professional Firm Profit Advice Report
Instruction video
Key points to remember:
- A trading company or trading trust is NOT entered into this TaxPlan. It is only the Professional (IPP added in the first column) and anyone else in their family group (spouse / children / bucket company) that receives income or a benefit DURING the year from the professional firm that is entered into TaxPlan columns.
- Any profits made by a trading company are excluded from TaxPlan unless they are distributed out to the Professional or their family.
- Prior year retained earnings distributed to a Professional or their family this year are included in the TaxPlan.
- A franked dividend paid directly from a professional company to a Professional or via a Trust to the Professional is included with the franking credits in the one line "Net Business Profits". For example, if a $75,000 cash dividend that has $25,000 of franking credits is paid out to Dr Dave from his Medical Company, the accountant should enter $100,000 under "Net Business Profits" for Dr Dave in TaxPlan.
- All other NON-PROFESSIONAL FIRM income should be entered in the usual places in TaxPlan. For example, a dividend from BHP shares should still be separated into the Franked Dividend and Franking Credits amounts in TaxPlan.