Commonwealth Consolidated Acts

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INCOME TAX ASSESSMENT ACT 1997 - SECT 4.15

How to work out your taxable income

  (1)   Work out your taxable income for the income year like this:

    Start formula Taxable income equals Assessable income minus Deductions end formula

Method statement

Step 1.   Add up all your assessable income for the income year.

To find out about your assessable income, see Division   6.

Step 2.   Add up your deductions for the income year.

To find out what you can deduct, see Division   8.

Step 3.   Subtract your deductions from your assessable income (unless they exceed it). The result is your taxable income. (If the deductions equal or exceed the assessable income, you don't have a taxable income.)

Note:   If the deductions exceed the assessable income, you may have a tax loss which you may be able to utilise in that or a later income year: see Division   36.

  (2)   There are cases where taxable income is worked out in a special way:

 

Item

For this case ...

See:

1.

A company does not maintain continuity of ownership and control during the income year and does not satisfy the business continuity test

Subdivision   165 - B

1B.

An entity is a * member of a * consolidated group at any time in the income year

Part   3 - 90

2.

A company becomes a PDF (pooled development fund) during the income year, and the PDF component for the income year is a nil amount

section   124ZTA of the Income Tax Assessment Act 1936

3.

A shipowner or charterer:

ï‚·   has its principal place of business outside Australia; and

ï‚·   carries passengers, freight or mail shipped in Australia

section   129 of the Income Tax Assessment Act 1936

4.

An insurer who is a foreign resident enters into insurance contracts connected with Australia

sections   142 and 143 of the Income Tax Assessment Act 1936

5.

The Commissioner makes a default or special assessment of taxable income

sections   167 and 168 of the Income Tax Assessment Act 1936

6.

The Commissioner makes a determination of the amount of taxable income to prevent double taxation in certain treaty cases

section   24 of the International Tax Agreements Act 1953

Note:   A life insurance company can have a taxable income of the complying superannuation class and/or a taxable income of the ordinary class for the purposes of working out its income tax for an income year: see Subdivision   320 - D.



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