Income Tax Assessment Act 1997



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

SECTION 4-15   How to work out your taxable income  

Work out your taxable income for the income year like this:

Taxable income   =   Assessable income   −   Deductions

Method statement

Step 1.

Add up all your assessable income for the income year.

To find out about your assessable income, see Division 6 .

Step 2.

Add up your deductions for the income year.

To find out what you can deduct, see Division 8 .

Step 3.

Subtract your deductions from your assessable income (unless they exceed it). The result is your taxable income. (If the deductions equal or exceed the assessable income, you don ' t have a taxable income.)


If the deductions exceed the assessable income, you may have a tax loss which you may be able to utilise in that or a later income year: see Division 36 .


There are cases where taxable income is worked out in a special way:

Item For this case … See:
1. A company does not maintain continuity of ownership and control during the income year and does not satisfy the business continuity test Subdivision 165-B
1A. (Repealed by No 80 of 2007 )  
1B. An entity is a *member of a *consolidated group at any time in the income year Part 3-90
2. A company becomes a PDF (pooled development fund) during the income year, and the PDF component for the income year is a nil amount section 124ZTA of the Income Tax Assessment Act 1936
3. A shipowner or charterer:
• has its principal place of business outside Australia; and
section 129 of the Income Tax Assessment Act 1936
  • carries passengers, freight or mail shipped in Australia  
4. An insurer who is a foreign resident enters into insurance contracts connected with Australia sections 142 and 143 of the Income Tax Assessment Act 1936
5. The Commissioner makes a default or special assessment of taxable income sections 167 and 168 of the Income Tax Assessment Act 1936
6. The Commissioner makes a determination of the amount of taxable income to prevent double taxation in certain treaty cases section 24 of the International Tax Agreements Act 1953


A life insurance company can have a taxable income of the complying superannuation class and/or a taxable income of the ordinary class for the purposes of working out its income tax for an income year: see Subdivision 320-D .

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