How to prepare an income tax return

Overview

This article explains how income tax calculation works in TaxLab. You'll start by ensuring the tax year and balance dates are correct, then import the source data for the entity's trial balance, adding and making adjustments in workpapers, and generating tax outputs, including the Statement of Taxable Income (SOTI). TaxLab automatically generates various tax provision reports, including the tax notes and tax return.

Income tax is organised into five main areas:

Instructions

1. Set the income year dates and payment tasks.
   When you create an entity, TaxLab automatically sets the tax year based on the country's standard balance date. If needed, you can adjust these dates anytime. By default, payment task checkboxes are selected for the current and prior tax years.
2. Import a trial balance from Xero or Microsoft Excel
   • If this is an entities first year in TaxLab, you want to assign accounts to the Balance Sheet and Income Statement.
   • Remember to Exclude tax expense accounts from the profit before tax (PBT).
   • Optional: assign accounts to the IR10 categories.
3. Add the relevant Workpapers to accounts or directly in the entity. Workpapers are used to make adjustments to income tax calculations.
   • Before adding workpapers you may want to Understand workpapers and how they function.
   • Optional: If workpapers aren’t required you can Select the Tax form disclosure type in the account.
4. Review the tax calculation and the income tax position.
5. View, edit and complete the return.
6. E-file the income tax return.
7. Roll over to the next tax year.