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What is Item J Total Debt?

Item J Total Debt represents the average total debt of a company over a two-year period. It includes current and non-current loans and non-current asset. This figure includes both current and non-current loans, as well as non-current asset term receivables. It is automatically calculated using client financial data according to 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 for the income year, then

  • Dividing this sum by two to obtain the average total debt.

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

Important Notes

  • If the amount shown in Item J on the tax form is negative, it may indicate incorrect account classifications in your accounting system—for example, liabilities mistakenly recorded as assets.

  • Users cannot manually adjust Item J in LodgeiT if financial data is imported since the figure is auto-generated.

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

To resolve a negative value in Item J that prevents the company return from being completed, there are two options:

A. Remove the Accounting Import and Manually Fill

  • Ensure the tax form is in "Draft" mode.
  • Delete the imported financials data from accounting software i.e.QuickBooks.
  • Manually enter the financial information, leaving the Total Debt field blank.

B. Correct the Classification in the Accounting System

  • Update the accounts in your accounting source software by reclassifying the negative amount from liability to asset, or correcting any misclassifications.
  • Reimport the financials into LodgeiT. This new import will replace the previous data.

After either option, the company return can be completed, signed, lodged, and published.

Preventing Unwanted Data from Importing into Item J

To exclude specific accounts from contributing to the Item J total debt calculation:

  • Navigate to the Financials > Accounts section.

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

  • This prevents those accounts from being mapped into the tax return and affecting Item J.

Additional Resources