Definitions and calculations
This section contains definitions for the following terms used throughout these taxation statistics
Total business income
Total business income is the amount:
- an individual showed under item P8 Business income and expenses at the total business income label of the 2014 individual tax return
- a company showed in the information statement under the income item at the total income label S of the 2014 company tax return
- a fund or self-managed super fund showed at item 10 under the income item at the total assessable income label V of the applicable 2014 fund annual return
- a partnership or trust showed at item 5 under the income item at the total business income label of the 2014 partnership or trust tax return.
Entity size
For the purposes of our yearly Taxation statistics, an Entity is an individual, a company, a fund, a self-managed fund, a partnership or a trust.
An entity’s size is then determined by the following table:
Entity size
|
Total business income
|
Loss
|
less than $0
|
Nil
|
equal to $0
|
Micro
|
$1 to less than $2 million
|
Small
|
$2 million to less than $10 million
|
Medium
|
$10 million to less than $100 million
|
Large
|
$100 million to less than $250 million
|
Very large
|
$250 million or more
|
Calculating net tax
Throughout these taxation statistics, 'net tax' is essentially the amount of tax owed for the income year, before refundable credits are taken into consideration. It does not generally equate to the amount of tax payable or refundable as shown on a notice of assessment.
Items in brackets below refer to tax return labels.
A taxable entity is one where net tax is more than $0, whereas non-taxable entities are those with net tax less than or equal to $0.
Individual net tax
Individual net tax is calculated as:
|
Total income or loss
|
less
|
Total deductions
|
less
|
Tax losses of earlier income years
|
gives
|
Taxable income or loss
|
apply
|
Individual marginal tax rates
|
add
|
Extra income tax
|
gives
|
Gross tax
|
subtract
|
Total non-refundable tax offsets
|
add
|
Medicare levy
|
add
|
Medicare levy surcharge
|
gives
|
Net tax
|
Note:Extra income tax: an example of this is the amount added to tax on taxable income when a primary producer’s average income exceeds taxable income in a particular year.Company net tax
Company net tax is calculated as:
|
Total income (item 6S)
|
less
|
Total expenses (item 6Q)
|
gives
|
Total profit or loss (item 6T)
|
add or subtract
|
Reconciliation items (item 7)
|
gives
|
Taxable income (calculation statement – item A)
|
apply
|
Relevant company tax rate
|
add
|
R&D recoupment tax (calculation statement – item M)
|
gives
|
Gross tax (calculation statement – item B)
|
subtract
|
Non-refundable tax offsets and Franking deficit tax offset
|
|
(calculation statement – items C, D and F)
|
gives
|
Net tax
|
Superannuation fund net tax
Superannuation fund net tax (for all types of fund) is calculated as:
|
Total assessable income (item 10V)
|
less
|
Total deductions (item 11N)
|
gives
|
Taxable income or loss (item 11O)
|
apply
|
Fund type specific tax rate
|
add
|
Tax on no-TFN quoted contributions (item 12J)
|
gives
|
Gross tax (item 12B)
|
subtract
|
Non-refundable non-carry forward tax offsets (item 12C)
|
gives
|
Net tax
|
Estimating tax on net capital gains
For taxation statistics purposes, the tax on net capital gains is an estimate of the tax required to be paid, based on using an average tax rate approach.
Tax on net capital gains is only estimated for taxable entities.
Tax on net capital gains
Tax on net capital gains is estimated as:
|
Net tax
|
divided by
|
Taxable income
|
gives
|
Average tax rate
|
multiplied by
|
Net capital gain
|
gives
|
Estimated tax on net capital gains
|
Estimating business net tax
For taxation statistics purposes, business net tax is an estimate of the amount of net tax attributable to net business income. Business net tax is only calculated for taxable individuals with net business income and taxable income.
Business net tax
Business net tax is estimated as:
|
Net income or loss from business (sum of items 15B and 15C)
|
divided by
|
Taxable income (label $ under the Losses section)
|
gives
|
Proportion of taxable income sourced from net business income
|
multiplied by
|
Net tax
|
gives
|
Estimated business net tax
|
Note:Where the proportion calculated above is greater than 1, it is changed to 1.Calculating net GST
Net GST is calculated as:
|
Gross GST payable
|
add
|
Deferred GST payments on imports
|
less
|
Input tax credits
|
gives
|
Net GST
|
The net amount of GST on the activity statement can also be affected by increasing and decreasing adjustments.