What’s Included in Taxable Income?

✅ Included:

• Salary and wages
• Business profits
• Interest and dividends
• Rent from investment properties
• Capital gains
• Trust distributions
• Foreign income (in most cases)

❌ Not Included:

• Exempt income (e.g., some pensions, scholarships)
• Non-assessable, non-exempt income (e.g., certain COVID-19 grants)
• Genuine expense reimbursements
• Tax-free thresholds or offsets

Taxable Income vs Assessable Income

Term	Meaning
Assessable Income	All income before deductions
Taxable Income	Income after deductions — used to calculate tax

Deductions include:

• Work-related expenses
• Business running costs
• Depreciation
• Super contributions
• Tax agent fees

Why It Matters

Your taxable income affects:

• How much tax you pay
• Eligibility for offsets and rebates
• Your marginal tax rate
• Government payments or obligations (e.g., HELP repayments, Medicare levy)

ATO Compliance & Errors to Avoid

• Don’t forget to include all income sources, including foreign and online earnings
• Only claim deductions with proof
• Report net income from side gigs, not just revenue
• Keep records for at least 5 years

How Ozobooks Helps

• Reviews all income and deductions to calculate accurate taxable income
• Helps sole traders and businesses optimise deductions
• Prepares compliant tax returns for individuals, partnerships, and companies
• Supports multi-source income and foreign income declarations

FAQ

Q1: Is taxable income the same as my salary?
Not always. It includes all assessable income minus deductions, which could be higher or lower than your salary.

Q2: Can I reduce my taxable income legally?
Yes — through legitimate deductions, super contributions, and offsets. Avoid aggressive tax schemes.

Q3: Are business expenses automatically deducted?
No. They must be legitimate, correctly recorded, and claimed in your tax return.

Q4: Does the tax-free threshold apply to taxable income?
Yes. If you’re an Australian resident, the first $18,200 of your taxable income is tax-free.