01 Sep 2009

Assessable Income in Australia

by Darren

Under Australian taxation law the term ``Assessable income'' means ordinary income and statutory income. However, those income types will not be assessable income if the amount is excluded by the law. "Ordinary income'' in the legislation is defined as "income according to ordinary concepts" This loose definition means that case law has evolved to identify various factors that indicate whether an amount is income according to ordinary concepts. Generally, an amount of ordinary income will include revenue generated from the sale of inventory, revenue generated form the provision of services and salaries and wages. "Statutory income" is included in assessable income by a specific provision of the tax law. An example of statutory income is a royalty which is not ordinary income but which is included in assessable income under section 15-12 of the tax law (ITAA97). Exempt income is not included in the calculation of assessable income. Examples of exempt income include any type of income generated by a charitable, religious, scientific and public educational institutions. Generally, GST is disregarded when working out assessable income A full list of income types under Australian law classified as Taxable or Non-Taxable can be found in the attached file. Australian_Income_List.pdf Each type of income needs to be analyzed to determine whether it is ordinary, statutory, capital gain or exempt. Once you have identified this then the sum of the ordinary statutory and gains are your total assessable income.

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