Taxable Income
Your assessable income minus allowable deductions — the figure used to calculate your income tax.
Taxable income is the amount of income on which your tax is calculated. It equals your assessable income (all income from employment, investments, business, and other sources) minus any allowable deductions (work-related expenses, investment expenses, donations, etc.). Tax is then calculated on this net figure using the progressive tax brackets.
Assessable income includes salary and wages, interest, dividends (including franking credits grossed-up), rental income, capital gains, business income, government payments, and foreign income. It does not include GST collected, exempt income (such as some government pensions), or non-assessable non-exempt income (such as the tax-free component of super benefits received after age 60).
Reducing your taxable income through legitimate deductions is the primary way individuals lower their tax bill. Common strategies include claiming work-related expenses, making tax-deductible super contributions (salary sacrifice or personal deductible contributions), and prepaying expenses like income protection insurance premiums. The ATO publishes occupation-specific guides to help you understand what deductions are available for your type of work.