• 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.

      Last modified: 23 Jun 2016QC 23099