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Definitions and calculations

Last updated 23 September 2020

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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.

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