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# Definitions and calculations

Last updated 23 September 2020

## 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 determined by referring to Table 21 below.

Table 21: Determine entity size

Entity size

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

Total business income is the amount:

• an individual showed under item P8 Business income and expenses at the total business income label of the 2015 individual tax return
• a company showed in the information statement under the income item at the total income label S of the 2015 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 2015 fund annual return
• a partnership or trust showed at item 5 under the income item at the total business income label of the 2015 partnership or trust tax return.

## 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 add Temporary budget repair levy 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

### Super fund net tax

Super fund net tax (for APRA and SMSFs respectively) is calculated as:

 Total assessable income (item 10V/11V) less Total deductions (item 11N/12N) gives Taxable income or loss (item 11O/12O) apply Fund type specific tax rate add Tax on no-TFN quoted contributions (item 12J/13J) gives Gross tax (item 12B/13B) subtract Non-refundable non-carry forward tax offsets (item 12C/13C) 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 estimated as:

 Net tax divided by Taxable income gives Average tax rate multiplied by Net capital gain gives Estimated tax on net capital gains

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 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
Note
The net amount of GST on the activity statement can also be affected by increasing and decreasing adjustments.

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