Before we get into the more detailed aspects of taxation, we'll discuss taxable income and apply some formulas to look at your own taxable income.

Taxable income is a key definition.

It’s usually the first item listed on your Notice of Assessment (or where applicable, Refund Notice) issued annually from the Australian Taxation Office (ATO).

It’s important to determine your taxable income correctly, as tax and levies are calculated based on this amount.

Taxable income is your assessable income reduced by any allowable deductions. This is shown by the formula:

  Taxable income = assessable income – allowable deductions.