Definitions and calculations

Find out about:

• Entity size
• Calculating net tax
• Estimating tax on net capital gains
• Estimating business net tax
• Calculating net GST

Entity size

For the purposes of our yearly Taxation statistics, an Entity is an individual, a company, a fund, a self-managed fund, a partnership or a trust.

An entity’s size is determined by referring to Table 21 below.

Table 21: Determine entity size

Entity size	Total business income
Loss	less than $0
Nil	equal to $0
Micro	$1 to less than $2 million
Small	$2 million to less than $10 million
Medium	$10 million to less than $100 million
Large	$100 million to less than $250 million
Very large	$250 million or more

Total business income is the amount:

• an individual showed under item P8 Business income and expenses at the total business income label of the 2015 individual tax return
• a company showed in the information statement under the income item at the total income label S of the 2015 company tax return
• a fund or self-managed super fund showed at item 10 under the income item at the total assessable income label V of the applicable 2015 fund annual return
• a partnership or trust showed at item 5 under the income item at the total business income label of the 2015 partnership or trust tax return.

Calculating net tax

Throughout these taxation statistics, 'net tax' is essentially the amount of tax owed for the income year, before refundable credits are taken into consideration. It does not generally equate to the amount of tax payable or refundable as shown on a notice of assessment.

Items in brackets below refer to tax return labels.

A taxable entity is one where net tax is more than $0, whereas non-taxable entities are those with net tax less than or equal to $0.

Individual net tax

Individual net tax is calculated as:

	Total income or loss
less	Total deductions
less	Tax losses of earlier income years
gives	Taxable income or loss
apply	Individual marginal tax rates
add	Extra income tax
gives	Gross tax
subtract	Total non-refundable tax offsets
add	Medicare levy
add	Medicare levy surcharge
add	Temporary budget repair levy
gives	Net tax

Note
Extra income tax: an example of this is the amount added to tax on taxable income when a primary producer’s average income exceeds taxable income in a particular year.

Company net tax

Company net tax is calculated as:

	Total income (item 6S)
less	Total expenses (item 6Q)
gives	Total profit or loss (item 6T)
add or subtract	Reconciliation items (item 7)
gives	Taxable income (calculation statement – item A)
apply	Relevant company tax rate
add	R&D recoupment tax (calculation statement – item M)
gives	Gross tax (calculation statement – item B)
subtract	Non-refundable tax offsets and Franking deficit tax offset
	(calculation statement – items C, D and F)
gives	Net tax

Super fund net tax

Super fund net tax (for APRA and SMSFs respectively) is calculated as:

	Total assessable income (item 10V/11V)
less	Total deductions (item 11N/12N)
gives	Taxable income or loss (item 11O/12O)
apply	Fund type specific tax rate
add	Tax on no-TFN quoted contributions (item 12J/13J)
gives	Gross tax (item 12B/13B)
subtract	Non-refundable non-carry forward tax offsets (item 12C/13C)
gives	Net tax

Estimating tax on net capital gains

For taxation statistics purposes, the tax on net capital gains is an estimate of the tax required to be paid, based on using an average tax rate approach.

Tax on net capital gains is estimated as:

	Net tax
divided by	Taxable income
gives	Average tax rate
multiplied by	Net capital gain
gives	Estimated tax on net capital gains

Estimating business net tax

For taxation statistics purposes, business net tax is an estimate of the amount of net tax attributable to net business income. Business net tax is only calculated for taxable individuals with net business income and taxable income.

Business net tax is estimated as:

	Net income or loss from business (sum of items 15B and 15C)
divided by	Taxable income (label $ under the Losses section)
gives	Proportion of taxable income sourced from net business income
multiplied by	Net tax
gives	Estimated business net tax

Note
Where the proportion calculated above is greater than 1, it is changed to 1.

Calculating net GST

Net GST is calculated as:

	Gross GST payable
add	Deferred GST payments on imports
less	Input tax credits
gives	Net GST

Note
The net amount of GST on the activity statement can also be affected by increasing and decreasing adjustments.