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:
We explain how to do this in Classifying revenue.
Step 2: Classify expenses
Classify the organisation's expenses into one of the following categories:
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.