Taxable income
Assessable income minus deductions — what tax is actually on.
Taxable income is your assessable income (everything you must declare — wages, business income, interest, capital gains) minus your allowable deductions. It’s the number your income tax and Medicare levy are actually calculated on, and it’s almost always lower than what you earned.
Worked example
You invoice $90,000, earn $500 of bank interest, and have $15,000 of deductible expenses. Assessable income is $90,500; taxable income is $75,500. Tax is worked out on the $75,500.
Common mistake
Quoting turnover when asked for income. Turnover is what came in; taxable income is what’s left after legitimate deductions — the difference can be tens of thousands.
Grounded in ATO guidance. Figures last checked . General information, not tax advice.
Related terms
Tax deduction vs tax offset
A deduction lowers income taxed; an offset lowers tax owed.
Marginal tax rate
The tax rate on your next dollar of income.
GST turnover ($75,000 threshold)
The gross income figure that triggers GST registration.
Tax-free threshold
The first $18,200 of income you can earn tax-free.
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