eTax and Assessable Income

(last updated 24/04/2014)

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The following tax time tip and checklists will help you prepare your annual etax return and calculate your tax refund.

See this post with tips, calculators and checklists to help you prepare your eTax Return (and get a better refund) with less hassle summary of Allowable Deductions.

Assessable income is the starting point for all tax returns whether you are using etax, a local tax agent or other online tax return preparation service.

Assessable income is all income receipts, regardless of how it is taxed or whether specific Tax-offsets apply, and includes many types of monetary receipts, including:
  • Salary or wage “received” - Shown on the annual PAYG Payment Summary. Since income is taxed when it is “received” this is a key term. If you have earned income but not yet “received” it, it is not included as income in that year. For example, if your employer went into liquidation and you are owed wages for work already performed, it will be included as income in the year that you receive the actual payment from the liquidator. Other items on the Annual PAYG Payment Summary which are exempt income but must be reported include - Reportable Fringe Benefits, Reportable Employer Superannuation Contributions. See this post for a checklist of Allowances and Associated Deductions.
          See this post if you have misplaced or lost your PAYG Payment Summary.
  • Termination payments - including unused annual leave (Lumps Sum A, Lump Sum B) and other Eligible Termination Payments (ETP’s) or Lump Sum D. ETP’s can include unused annual leave, unused Long Service Leave, and redundancy payments. They are unique as they are taxed in different ways and some are specifically exempt from income tax like redundancy Payments.
  • Lump Sum Payment in Arrears -  Lump sum payments in arrears relates to income from an earlier income year or years and should normally be shown at ‘E’ on your PAYG payment summary – individual non-business. A special rebate can apply to these payments. See our post on Lump Sum Payment in Arrears.
  • Allowances - Included on the annual PAYG Payment Summary, these receipts are usually linked to industry award payments, for example site allowance (common in the construction industry) or meal allowance (common in the transport industry). All are assessable income but not all are automatically deductible Some of these entitlements have been folded into the general award rate through agreements. In those cases these payments will be assessable in the normal way and shown as Gross Pay on the Annual PAYG Payment Summary.
  • Centrelink Payments - Most Centrelink payments are assessable income. Some, like Disability Pensions, are exempt income. These certificates are no longer mailed directly to recipients who must now access their Centrelink accounts and obtain the information online. See this eTax and Centrelink income checklist for a guide to assessable Centrelink income.
  • Australian Annuities and Superannuation Lump Sum Payments - These are payments received from superannuation/insurance companies for an annuity or a lump sum received from a superannuation account. Notification is by way of an Annual PAYG Payment Summary issued by the fund. Tax treatment can vary depending on age and other circumstances.
  • Interest and Dividend Income - These payments represent a return on a capital investment and notified either by a financial institution or a company. Where you do not supply your TFN, the paying institution are required to withhold income tax from the payment at the highest marginal tax rate (45%). When this occurs the tax withheld is included as a tax credit in your annual tax return and applied against any tax payable.
  • Employee Share Scheme - These receipts relate to discounts associated with an employer sponsored share scheme. Where applicable, shares are offered to employees at a discount to the market rate at time of commencement. That discount is made assessable in certain circumstances. Such payments are notified by way of a statement from the sponsoring company. See this post on Employee Share Schemes.
  • Business income - These receipts include payments for goods and or services from a business operation and will also include Personal Services Income (PSI).

What about income from a hobby?:

Some activities that derive income, although similar to a business, are in reality a pastime pursued for pleasure or recreation. Income earned from a hobby is not assessable income. See this post for an explanation and checklist of what is a hobby.

This is a very brief explanation of what assessable income to include in your etax return or other online tax return application.

E-tax Return

See these posts with tips, calculators and checklists to help you prepare your eTax Return (and get a better refund) with less hassle:
Web Based Tax Return App:

A benefit of using eZtax, our web based tax return app, is we have the genuine online tools, knowledge and experience to get the best tax refund for our clients, making it easy to complete your annual tax return online.

Our Web Based Tax Return App will step you through all the necessary questions to increase your  tax refund and take into account all relevant tax deductions and tax offsets. Try it now. Its FREE to get started!

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