Use the calculator
You can use the calculator to:
- estimate your tax for the year
- work out your varied instalment amount
- work out your entitlement to credits for previous PAYG instalments.
Manually calculate estimated tax on instalment income
Use this method to calculate the estimated tax on your instalment income:
1. Work out your estimated taxable income
2. Work out the tax on your estimated taxable income
3. Subtract tax offsets (other than refundable tax offsets)
4. Review your estimated net tax payable
5. Add your estimated Medicare levy
6. Review your net tax payable after applying Medicare levy and any foreign income tax offset
7. Add any compulsory study loan or Trade Support Loan repayments
8. Subtract any refundable tax offset
9. Subtract any estimated tax credits
Result: estimated tax on instalment income
If your instalment income for the year will be zero, you can vary your instalment rate to zero. You do not need to estimate your tax to do this.
1. Work out your estimated taxable income
Your estimated taxable income is your estimated income minus your estimated allowable deductions.
Estimated income
When you are estimating your income, include all your estimated gross income for the year, such as:
- salary, wages or allowances
- payments made under a labour hire arrangement
- payments subject to voluntary withholding agreements
- personal services income attributed to you
- income from a business (not subject to voluntary agreements)
- Australian government allowances
- Australian government pensions
- assessable foreign income including pensions and annuities
- interest
- dividends
- franking credits
- partnership distributions
- trust distributions
- other assessable income.
Do not include:
- Net capital gains – these are not included as they are generally one-off payments that you will not receive in the next income year. However, if you are a super fund or self-managed super fund these do need to be included.
- Exempt income – such as the family tax benefit or child care benefit payments.
Estimated allowable deductions
When you are estimating your allowable deductions, include:
- work-related expenses
- business expenses
- interest and dividend deductions
- gifts or donations
- the deductible amount of an un-deducted purchase price of an Australian pension or annuity
- the cost of managing tax affairs
- tax losses of earlier income years
- other allowable deductions.
2. Work out the tax on your estimated taxable income
Apply the current individual income tax rates or company tax rates to your estimated taxable income to calculate the full year's tax on your estimated taxable income.
3. Subtract tax offsets (other than refundable tax offsets)
Tax offsets are different to tax deductions in the way you apply them.
- Deductions are subtracted from your income to work out your taxable income.
- The tax on that taxable income is then reduced by the tax offsets for which you are eligible.
If your tax offsets are greater than the tax on your assessed taxable income, you can generally only use them to reduce the amount of tax on your taxable income to zero (unless they are refundable tax offsets).
Tax offsets you can include in this calculation are:
- super contributions, annuity and pension (except contributions made on behalf of your spouse)
- zone or overseas forces
- low and middle income
- seniors and pensioners
- invalid and invalid carer
- beneficiary
- employment termination payment
- life assurance bonus
- other tax offsets.
Tax offsets you can't include:
- franking deficit tax offset
- private health insurance tax offset
- child care tax offset
- low income earners tax offset
- early stage investors tax offset
- exploration development incentive tax offset
- offset for Medicare levy surcharge (lump sum payment in arrears)
- the super tax offset for contributions made on behalf of your spouse.
4. Review your estimated net tax payable
Your estimated net tax payable is the tax on your estimated taxable income minus your estimated tax offsets.
If this is a negative amount, your estimated net tax payable will be zero.
5. Add your estimated Medicare levy
Your estimated Medicare levy can be worked out by multiplying your estimated taxable income (amount from step 1) by 2%.
Do not include extra amounts payable under the Medicare levy surcharge.
You may be exempt from paying the Medicare levy or be eligible to pay a reduced amount of Medicare levy. Contact us if you think you may be exempt or eligible to pay a reduced amount.
6. Review your net tax payable after applying Medicare levy and any foreign income tax offset
This is your estimated net tax payable after applying all your non-refundable tax offsets and the Medicare levy.
If this is a negative amount, your estimated net tax payable will be zero.
If you are entitled to claim an amount of foreign income tax offset, you can use that offset to reduce any net tax payable remaining after applying all your other non-refundable tax offsets, and also reduce your liability to pay the Medicare levy.
You will not be able to work out your foreign income tax offset if you estimate either a capital gain or exempt foreign employment income. If you expect to receive any of these, contact us for assistance.
7. Add any compulsory study loan or Trade Support Loan repayments
If your estimated repayment income is above the minimum repayment threshold, your estimated tax may include an amount for you to pay toward your Higher Education Loan Program (HELP), Student Startup loan (SSL), ABSTUDY SSL, Student Financial Supplement Scheme (SFSS), VET Student loan (VETSL) or Trade Support Loan (TSL) liability.
Repayment income is calculated using your:
- taxable income
- reportable fringe benefits amounts (as shown on your payment summary)
- total net investment loss (which includes net rental losses)
- reportable super contributions
- any exempt foreign employment income amounts.
We will only calculate one compulsory repayment for HELP, SSL, VETSL, SFSS or TSL based on your accumulated debt at the time we make the assessment.
You will not have to make a compulsory repayment for HELP, SSL, VETSL, SFSS or TSL if you have a spouse or dependants and if, due to low family income, you either:
- are entitled to a reduction of your Medicare levy
- do not have to pay the Medicare levy.
You can calculate your estimated compulsory repayment using the study and training loan repayment thresholds and rates.
8. Subtract any refundable tax offset
If you have refundable tax offsets, they can be applied against your Medicare levy, and your study and training loan repayment liabilities.
Refundable tax offsets include the franking credit tax offset.
Do not include the private health insurance rebate tax offset.
9. Subtract any estimated tax credits
These items include amounts that you estimate will be withheld from payments made to you, such as:
- salary or wages
- payments subject to voluntary agreements
- payments made under a labour hire arrangement
- personal services income attributed to you
- investments where you have not supplied a TFN
- sales or services you have provided where you have not quoted an ABN.
Result: estimated tax on instalment income
The result of these steps is the tax on your instalment income.
If this amount is a negative figure, your estimated tax is zero.
If you vary your pay as you go (PAYG) instalments, you will need to estimate the tax on your instalment income to work out your varied amount.