We calculate tax payable with income averaging
You don't need to work out your tax payable with income averaging. We'll work it out from the amount you include in your tax return.
If you want to work it out for yourself, follow the steps.
Step 1: Work out your income
Add your Average taxable professional income (ATPI) (d) to your taxable income that isn't subject to income averaging (your taxable non-professional income (e)). The total, called your ‘other income’, is taxed at normal rates (g).
Step 2: Work out your tax payable on special professional income
- Subtract your ATPI from this year’s TPI to get your above average special professional income.
- To work out the tax payable on this income:
- to your ‘other income’, add one-fifth of your above average special professional income
- work out the tax payable on this amount
- subtract the tax payable on your ‘other income’
- multiply the result by 5.
Step 3: Work out your total tax payable
- Add the tax on your ‘other income’ and the tax on your above-average special professional income.
- The result is your total tax payable.
Return to: Types of professional income