INCOME TAX ASSESSMENT ACT 1997

CHAPTER 1 - INTRODUCTION AND CORE PROVISIONS  

PART 1-3 - CORE PROVISIONS  

Division 4 - How to work out the income tax payable on your taxable income  

SECTION 4-10   How to work out how much income tax you must pay  

4-10(1)  


You must pay income tax for each *financial year.

4-10(2)  
Your income tax is worked out by reference to your taxable income for the income year . The income year is the same as the *financial year, except in these cases:


(a) for a company, the income year is the previous financial year;


(b) if you have an accounting period that is not the same as the financial year, each such accounting period or, for a company, each previous accounting period is an income year.

Note 1:

The Commissioner can allow you to adopt an accounting period ending on a day other than 30 June. See section 18 of the Income Tax Assessment Act 1936 .

Note 2:

An accounting period ends, and a new accounting period starts, when a partnership becomes, or ceases to be, a VCLP, an ESVCLP, an AFOF or a VCMP. See section 18A of the Income Tax Assessment Act 1936 .

4-10(3)  


Work out your income tax for the *financial year as follows:


Income tax   =   (Taxable income   ×   Rate)   -   Tax offsets

Method statement

Step 1.

Work out your taxable income for the income year.

To do this, see section 4-15 .


Step 2.

Work out your basic income tax liability on your taxable income using:

  • (a) the income tax rate or rates that apply to you for the income year; and
  • (b) any special provisions that apply to working out that liability.
  • See the Income Tax Rates Act 1986 and section 4-25 .


    Step 3.

    Work out your tax offsets for the income year. A tax offset reduces the amount of income tax you have to pay.

    For the list of tax offsets, see section 13-1 .


    Step 4.

    Subtract your *tax offsets from your basic income tax liability. The result is how much income tax you owe for the *financial year.

    Note 1:

    Division 63 explains what happens if your tax offsets exceed your basic income tax liability. How the excess is treated depends on the type of tax offset.

    Note 2:

    Section 4-11 of the Income Tax (Transitional Provisions) Act 1997 (which is about the temporary budget repair levy) may increase the amount of income tax worked out under this section.

    4-10(3A)  
    (Repealed by No 58 of 2006 )

    Income tax worked out on another basis

    4-10(4)  
    For some entities, some or all of their income tax for the * financial year is worked out by reference to something other than taxable income for the income year.

    See section 9-5 .


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