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  • Types of income

    When we refer to income it can be assessable, exempt or taxable, it's not always in the form of money.

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    Assessable income

    Assessable income is income that you pay tax on, if you earn enough to exceed the tax-free threshold. Examples of assessable income you must declare are:

    • salary and wages
    • tips, gratuities and other payments for your services
    • some allowances, such as for clothing and laundry
    • interest from bank accounts
    • dividends and other income from investments
    • bonuses and overtime an employee receives
    • commission a salesperson receives
    • pensions
    • rent.

    If you receive your income as cash including cash cheques, you must declare the cash as income when you prepare and lodge your tax return.

    You can usually claim the tax-free threshold of $18,200 on one source of income you earn in the income year.

    Exempt income

    Exempt income is income that you don't pay tax on (that is tax-free). You may still need to include these amounts in your tax return for use in other tax calculations.

    Examples of exempt income can include:

    • some government pensions and payments, including the invalidity pension
    • some education payments.

    If the only income you receive during an income year is exempt income you don't have to pay any income tax on it.

    Non-assessable, Non-exempt income

    Non-assessable, Non-exempt income amounts are those which you do not include as income in your tax return.

    Non-assessable, non-exempt income can include:

    Taxable income

    Your taxable income is the income you have to pay tax on. The taxable amount is the amount left after you claim a deduction for all the expenses you can. These amounts reduce the amount of assessable income you pay tax on.

    Assessable income − allowable deductions = taxable income

    You can only claim deductions where you incur the cost and weren't reimbursed. You also usually need evidence of your expenses.

    Deductions that you apply reduce the amount of income you pay tax on. You do not deduct them directly from your tax amount.

    Last modified: 24 May 2022QC 17709