ap00009

The specific deduction provisions

Assessable income less allowable deductions = taxable income

There are two kinds of allowable deductions - general and specific

Division 25 deals with some specific type of deductions you can claim

Division 26 deals with some specific type of deductions you can NOT claim

Assessable income - allowable deductions

= taxable income

4-15 How to work out your taxable income

(1) Work out your taxable income for the income year like this:

Method statement

Step 1. Add up all your assessable income for the income year.

To find out about your assessable income, see Division 6.

Step 2. Add up your deductions for the income year.

To find out what you can deduct, see Division 8.

Step 3. Subtract your deductions from your assessable income (unless they exceed it). The result is your taxable income. (If the deductions equal or exceed the assessable income, you don’t have a taxable income.)

So the trick is to get the assessable income and then take away the deductions, but what are the deductions?

There are 2 kinds of deductions

Specific and General

The previous 2 topics dealt with general deductions, and this one will deal with specific deductions.

Section 8-5 says you can deduct an amount from your assessable income if a specific section of the Income Tax Assessment Act says you can. The Assessment Act contains some specific provisions authorising deductions. You can refer to a listing of some of these in section 12-1

Division 25 lists some specific of deductions you can claim

You will also find details of the following deductions in the topic on specific deductions you can claim

25-5 Tax-related expenses

25-10 Repairs

25-15 Amount paid for lease obligation to repair

25-20 Lease document expenses

25-25 Borrowing expenses

25-30 Expenses of discharging a mortgage

25-35 Bad debts

25-40 Loss from profit-making undertaking or plan

25-45 Loss by theft etc.

25-50 Payments of pensions, gratuities or retiring allowances

25-55 Payments to associations

25-60 Parliament election expenses

25-75 Rates and land taxes on premises used to produce mutual receipts

Division 26 deals with some specific type of deductions you can NOT claim

Section 26 lists the types of deductions that can not be claimed. You can refer to them now if you are interested