Steps for calculating taxable income

This flowchart shows how the three categories of revenue and expenses are used in calculating taxable income.

Step 1: Classify revenue

Classify the organisation's revenue into one of the following categories:

• non-assessable
• assessable
• apportionable

We explain how to do this in Classifying revenue.

Step 2: Classify expenses

Classify the organisation's expenses into one of the following categories:

• non-deductible
• deductible
• apportionable

We explain how to do this in Classifying expenses.

Step 3: Separate the apportionable items

Separate the apportionable revenue and expenses into:

• non-assessable and assessable
• non-deductible and deductible

We explain how to do this in Separating apportionable items.

Step 4: Calculate the taxable income

Total the assessable income (from steps 1 and 3) and the deductible expenses (from steps 2 and 3). Once you have done this, you can calculate the taxable income.

Taxable income = assessable income – deductions

We provide worked examples of how to calculate taxable income in Calculating taxable income.