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Once you have worked out the tax payable on taxable income, you can reduce it by the allowable offsets

Work out the tax then take away the offsets

Section 4-10 tells you how to work out your tax payable.

You apply the rate of tax, which applies to your taxable income and then you take away the offsets, which you can claim. Let's use the language of section 4-10

Method statement

Step 1. Work out your taxable income for the income year.

To do this, see section 4-15.

Step 2. Work out your basic income tax liability on your taxable income using:

(a) the income tax rate or rates that apply to you for the income year; and

(b) any special provisions that apply to working out that liability.

See the Income Tax Rates Act 1986.

Step 3. Work out your tax offsets for the income year. A tax offset reduces the amount of income tax you have to pay.

For the list of tax offsets, see section 13-1.

Step 4. Subtract your *tax offsets from your basic income tax liability. The result is how much income tax you owe for the *financial year. (If your total tax offsets exceed your basic income tax liability, you are not entitled to a refund, or to offset the excess against any other liability.)

So what are these offsets?

The answer is in step 3 of section 4-10

A tax offset reduces the amount of income tax you have to pay.

A list of these tax offsets can be found in section 13-1

For further details refer to the topics containing explanations of some of the personal rebates (offsets) which can be claimed. the to