Income Tax

Income tax is levied on taxable income. Taxable income is calculated as assessable income less any allowable deductions. Deductions include wages, cost of stock, rent, bad debts, and previous year losses.

Sole traders are not required to complete a separate tax return for their business. They use their personal income tax return to report their business income and deductions. Partnerships complete a partnership tax return to show the partnership's income and deductions and how the profit or loss was shared among partners. Companies complete a company tax return to calculate the income tax the company should pay. Income tax is calculated according to taxable income for sole traders.

Resident Tax Rates 2011-12

Taxable Income

Tax on this income

$0 - $6,000


$6,001 - $37,000

15c for each $1 over $6,000

$37,001 - $80,000

$4,650 plus 30c for each $1over $37,000

$80,001 - $180,000

$17,550 plus 37c for each $1 over $80,000

Over $180,000

$54,550 plus 45c for each $1 over $180,000

NOTE: Resident tax rates do not include the Medicare levy of 1.5%.


A partnership running a business must complete a partnership tax return to show all income earned and deductions claimed for expenses during the course of the business. Each partner pays tax on their share of the partnership's income. Consequently they must include their individual share of the net partnership profit or loss in their personal tax return.


A company is a distinct legal entity with its own income tax liability therefore a company tax return must be completed for each company. A company's income tax is calculated as a percentage of the taxable income the company earned during the financial year. The 2012 company tax rate is 30%.

IMPORTANT DISCLAIMER: This article is published as a guide to clients and for their private information. This article does not constitute advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of these areas.


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