We calculate tax payable with income averaging
You do not need to work out your tax payable with income averaging. We will work it out from the amount at question 24 – label Z in your supplementary tax return.
If you want to work it out for yourself, follow the steps below.
Step 1: Work out your income
Add your Average taxable professional income (ATPI) (d) to your taxable income that is not subject to income averaging (your taxable non-professional income (e)). The total, called your ‘other income’, is taxed at normal rates (g).
Step 2: Work out your tax payable on special professional income
- Subtract your ATPI from this year’s TPI to get your above average special professional income.
- To work out the tax payable on this income:
- to your ‘other income’, add one-fifth of your above average special professional income
- work out the tax payable on this amount
- subtract the tax payable on your ‘other income’
- multiply the result by 5.
Step 3: Work out your total tax payable
- Add the tax on your ‘other income’ and the tax on your above-average special professional income.
- The result is your total tax payable.
Continue to: How to complete your tax return with income averaging