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Taxable professional income (TPI)

Last updated 30 November 2006

TPI is the amount - if any - remaining after taking away from your assessable professional income:

  1. the total of the deductions that reasonably relate to this income
  2. a part of any apportionable deductions - for example, gifts to charity which you have shown at item D8 on your tax return.

Completing your tax return

For the Tax Office to work out your income averaging, you must complete Z item 22 on your Tax return for individuals (supplementary section) 2005 - see step 3 of the instructions for item 22 in TaxPack 2005 supplement.

The amount to write at Z is your assessable professional income less the amount at 1 as described in Taxable professional income above. Do not deduct any apportionable deductions - for example, gifts to charity that you have shown at item D8 of your tax return. The Tax Office will take these into account as required by 2 to work out your TPI and your income averaging.

At V item 22, write the total of your category 2 other income - see Other income in question 22 in TaxPack 2005 supplement - including the amount you have worked out for Z item 22. Do not include any amounts already shown at items 1, 2, 12, 13 or 14 on your tax return. If you have not shown your TPI at other items on your tax return, you must include it at V item 22. If you include your TPI at V, do not claim any deductions you used to work out that income at items D1 to D10 or D11 to D15 on your tax return.

Average taxable professional income (ATPI)

Generally, average taxable professional income (ATPI) in an income year is one-quarter of the sum of the TPIs for the preceding four years. Special rules apply for working out the ATPI if your income averaging year 1 was less than four years ago. So, in the first four years, ATPI is worked out as follows:

  • year 1 nil
  • year 2 one-third of TPI in year 1
  • year 3 one-quarter of TPI in years 1 and 2
  • year 4 one-quarter of TPI in years 1, 2 and 3.

If you were not a resident at any time during the year immediately before your year 1, phone the Tax Office.