For us to work out your income averaging, you must complete question 24 – label Z in your supplementary tax return 2024. See step 3, question 24 in the supplementary tax return instructions 2024.
The amount to write at question 24 – label Z in your supplementary tax return is your assessable professional income less the total of your deductions that reasonably relate to this income. Don't deduct any apportionable deductions, for example, gifts to charity that you have shown at question D9 in your tax return. We will take these into account to work out your TPI and your income averaging.
At question 24 – label V in your supplementary tax return, write the total of your category 4 other income (see step 1 question 24 in the supplementary tax return instructions 2024), including the amount you wrote at question 24 – label Z.
Do not include any amounts already shown at questions 1, 2, 13, 14 or 15 in your tax return.
If you have not shown your TPI at other questions in your tax return, you must include it at question 24 – label V.
If you include your TPI at label V, do not claim any deductions you used to work out your TPI at questions D1 to D10 or D11 to D15 in your tax return.
Example: working out tax payable with income averaging
Kevin has a taxable income of $60,000, including assessable professional income of $45,000. He has deductions of $5,000 that reasonably relate to his assessable professional income (this amount does not include gifts) and he has no other deductions. His average TPI over the last 4 years was $9,000.
Kevin’s tax payable, before the Medicare levy or tax offsets are taken into account, is $7,942.00. It would have been $9,967.00 (the tax on $60,000) if income averaging had not been applied.
|
Row |
Calculation element |
Amount |
|---|---|---|
|
a |
Assessable professional income |
$45,000 |
|
b |
Deductions |
$5,000 |
|
c |
TPI |
$40,000 |
Kevin transfers the amount at row c to question 24 – label Z in his supplementary tax return and, if he has not already included any of this amount at questions 1, 2, 13, 14 or 15, he also writes it at question 24 – label V in his supplementary tax return.
ATPI
One-quarter of the sum of Kevin's TPI for the preceding 4 years, not including this income year
= $9,000 (d)
Taxable non-professional income
amount of TAXABLE INCOME OR LOSS at $ in his tax return minus the amount shown at question 24 – label Z in his supplementary tax return
= $60,000 − $40,000
= $20,000 (e)
Other income
= (d) + (e)
= $9,000 + $20,000
= $29,000 (f)
Tax on other income at ordinary rates
= $2,052 (g)
Above-average special professional income
= (c) − (d)
= $40,000 − $9,000
= $31,000 (h)
Tax on other income plus one-fifth of above-average special professional income
= tax on [(f) + 1/5 (h)]
= tax on [$29,000 + $6,200]
= Tax on $35,200
= $3,230 (i)
Tax on above-average special professional income
= [(i) − (g)] × 5
= [$3,230 − $2,052] × 5
= $5,890 (j)
Kevin's tax payable
= (g) + (j)
= $2,052 + $5,890
= $7,942 (k)