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Tax reconciliation review checklist

Tax reconciliation review checklist before tax sign-off

The tax reconciliation is where accounting profit is bridged to taxable income. It is one of the most checkable parts of a file, because much of it is arithmetic and defined comparison. This checklist sets out what an Australian tax practitioner can work through when reviewing the reconciliation before sign-off.

It also explains where deterministic computer logic is genuinely useful, and where the tax treatment and professional conclusion still belong to the practitioner.

Published 11 August 2026. Last reviewed 11 August 2026. Technically reviewed by the Taxpartna tax team.

Every company and trust return depends on a reconciliation from accounting profit to taxable income. When that reconciliation is wrong, the return is wrong, regardless of how carefully everything else was prepared. Reviewing it well means confirming both that the numbers agree and that each adjustment reflects the correct treatment.

This checklist sits within the wider file review. For the full picture, see our tax return review checklist.

Tax reconciliation review checklist

Work through the following areas when reviewing the reconciliation.

Starting point and agreement to the accounts

  • The accounting profit or loss used as the starting point agrees to the financial statements.
  • The entity and period of the reconciliation match the return being reviewed.
  • Prior-year comparatives, where used, agree to the prior-year return.

Permanent differences

  • Non-deductible expenses have been added back and are supported.
  • Non-assessable income has been deducted and is supported.
  • Entertainment, fines, and other commonly adjusted items have been considered.

Temporary differences and timing items

  • Depreciation differences between accounting and tax have been reconciled.
  • Provisions and accruals adjusted for tax are supported.
  • Prepayments and other timing items have been treated consistently with prior years.

Specific tax adjustments

  • Capital gains included in the reconciliation agree to the CGT workpapers.
  • Division 7A, trust distribution and other specific adjustments are reflected correctly.
  • Losses brought forward and applied are supported and within the available amount.

Arithmetic and final agreement

  • The reconciliation adds up.
  • The reconciled taxable income agrees to the amount in the tax return.
  • Tax payable, offsets and instalments flow through consistently.

File notes and practitioner conclusion

  • Each material adjustment is supported by a workpaper or file note.
  • Reviewer queries and unresolved items are recorded.
  • The practitioner's conclusion on the reconciliation is documented.

Where deterministic computer logic is useful

The tax reconciliation is a good example of where the type of check matters. Defined comparisons and arithmetic relationships can be checked consistently by computer logic, while the tax treatment and professional conclusion remain matters for the practitioner.

A computer can reliably confirm that the reconciliation adds up, that the starting profit agrees to the financial statements, and that the final figure agrees to the return. What a computer should not do is decide whether an expense is deductible or an amount is assessable. That is professional work.

This is why Taxpartna uses deterministic computer logic for defined tests and comparisons, and AI-assisted document analysis for locating and connecting the supporting information. You can read more about how these capabilities work together in our overview of AI tax quality assurance.

Where Taxpartna fits into the reconciliation review

Taxpartna augments the review by checking defined relationships across the file and surfacing items that do not agree, so the reviewer can focus on the adjustments that require judgement. It does not decide the tax treatment. The registered tax practitioner retains responsibility for calculations, professional assessment, conclusions and final sign-off.

Related tax review resources

Frequently asked questions

It is the review of the workpaper that reconciles accounting profit to taxable income. The reviewer confirms that each adjustment is supported, that the arithmetic is correct, and that the reconciled taxable income agrees to the tax return, before the practitioner signs off.

Defined comparisons and arithmetic relationships can be checked consistently by computer logic. Examples include confirming that the reconciliation adds up, that the starting profit agrees to the financial statements, and that the final taxable income agrees to the return. The tax treatment of each adjustment remains a matter for the practitioner.

No. Taxpartna can check defined relationships and surface items for review, such as an amount that does not agree between documents. Whether a particular adjustment is the correct tax treatment is a professional judgement for the registered tax practitioner.

Deterministic logic returns the same result every time for a defined test, which suits arithmetic and exact comparisons. AI interpretation suits reading varied documents and connecting related information. Using each for what it is suited to makes the review more reliable and easier to audit.

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This page provides general information about reviewing a tax reconciliation and about the Taxpartna platform. It does not constitute tax, legal or professional advice. Taxpartna is a quality assurance assistance tool designed for use by registered tax practitioners. Taxpartna does not provide tax advice, tax agent services or BAS agent services. All calculations, professional judgements and sign-off decisions remain the responsibility of the registered tax practitioner.