Assessable Income
All income you must report in your tax return, including salary, interest, dividends, rental income, and capital gains.
Assessable income is the total of all income you must include in your tax return before deductions. It encompasses ordinary income (salary, wages, business income, interest, rent, and royalties) and statutory income (capital gains, some government payments, and amounts specifically included by tax law such as employer super contributions above certain caps).
Common types of assessable income include: employment income (salary, wages, bonuses, commissions, allowances), investment income (interest, dividends including franking credit gross-up, rental income, capital gains), business income (sole trader or partnership distributions), government payments (JobSeeker, Youth Allowance, Austudy), foreign income, and share scheme benefits.
Assessable income does not include exempt income (such as some Defence Force payments, certain scholarships, and the tax-free component of super lump sums received after age 60) or non-assessable non-exempt income (NANE, such as non-concessional super contributions returned). Understanding what is and isn't assessable is important to avoid both under-reporting (which attracts penalties) and over-reporting (which means paying too much tax).
How it works
Assessable income is the full list of income you're required to report in your tax return before any deductions are applied. It covers both ordinary income — salary, wages, business income, interest, rent, royalties — and statutory income, which tax law specifically brings into the net even though it might not feel like 'ordinary' income, such as capital gains or certain government payments.
You meet assessable income at tax return time as the starting point of the whole calculation: every income statement, dividend statement, bank interest summary, and rental income record gets added together to build the total assessable income figure, before any deductions are subtracted to arrive at taxable income. Common contributors include employment income such as salary, bonuses, and allowances, investment income such as interest, dividends grossed up for franking credits, rental income, and capital gains, and government payments like JobSeeker or Youth Allowance.
The trap is assuming that if money landed in your account, it must be assessable — some receipts, like exempt income or non-assessable non-exempt amounts, sit outside the calculation entirely and shouldn't be included. Getting this wrong in either direction causes problems: leaving out assessable income risks penalties for under-reporting, while including things that shouldn't be there means paying more tax than you actually owe.
Example: building up a total assessable income figure
Suppose over the year you earn $70,000 in salary from your main job, $500 in bank interest on your savings, and $12,000 in gross rental income from an investment property. Each of these is a form of ordinary income that must be reported.
Adding them together — $70,000, $500, and $12,000 — gives total assessable income of $82,500 for the year. This is the figure deductions are then subtracted from to arrive at your taxable income; it's not yet your final tax base, just the starting total before any expenses are taken into account.
Related Terms
Taxable Income
Your assessable income minus allowable deductions — the figure used to calculate your income tax.
Exempt Income
Income that is not subject to tax and does not need to be included in your tax return.
Income Tax
Tax levied by the federal government on your taxable income, calculated using progressive tax brackets.
Tax Return
An annual form lodged with the ATO reporting your income, deductions, and tax payable or refundable for the financial year.
Franking Credits (Imputation Credits)
Tax credits attached to dividends representing company tax already paid on the profits, preventing double taxation.