Income

Income

Go onto the following website and look up the award wages for various occupations you are interested in. Do they surprise you? It is great to get an idea of the various awards for different careers.

https://www.fairwork.gov.au/pay/minimum-wages/pay-guides

This Weeks Career Brain Stretchers

Imagine you are a.......

 * Stockbroker – Why would good math skills be important to your job? What other personal attributes would be needed?

 * Project Manager – What knowledge and skills would be required to lead a team of trades people to complete a building complex.

 * Statistician – Why might a food company hire you? Why might a political party hire you?

 * Forensic Scientist – What types of evidence would you collect and analyse to help solve crimes?

Record your answers on this week’s activity sheet. Some of the questions may require your research first.

Income – What Is It?

Income is the acquisition of money via a regular source, including money that you earn through work, or any allowance that you might receive on a regular basis. For the purposes of taxation, the Australian Tax Office (ATO) makes a distinction between assessable income, which is subject to tax, and exempt income, which cannot be taxed. Your taxable income is the amount left over after you make all allowable deductions from your assessable income and what the ATO recognises as the amount on which you must pay tax.

Defining Income

Income is money (or some equivalent value) that an individual or business receives, usually in exchange for providing a good or service or through investing capital. Income is used to fund day-to-day expenditures. Investments, pensions, and Social Security are primary sources of income for retirees. For individuals, income is most often received in the form of wages or salary. Business income can refer to a company’s remaining revenues after paying all expenses and taxes. In this case, income is referred to as “earnings.” Most forms of income are subject to taxation.

Watch this video to understand how tax works in Australia:

[Video: Explained: How does tax work in AU?]

https://youtu.be/FeqwZwQcrj8?si=EorrfwTu691cT2Fu

Understanding Income

Individuals receive income through earning wages by working and making investments into financial assets such as stocks, bonds, and real estate. For instance, an investor’s stock holding may pay income in the form of an annual 5% dividend. In most countries, earned income is taxed by the government before it is received. The revenue generated by income taxes finances government actions and programs as determined by federal and state budgets.

Assessable Income

Assessable income is income that can be taxed, provided you earn enough to exceed your tax-free threshold. Examples of assessable income are:

 * Salary and wages.

 * Tips, gratuities and other payments for your services.

 * Allowances for things like car, travel, clothing and laundry.

 * Interest from bank accounts.

 * Dividends and other income from investments.

 * Bonuses and overtime an employee receives.

 * Commission a salesperson receives.

 * Pensions.

 * Rent.

Exempt Income

Exempt income is income that cannot be taxed. Examples of exempt income include:

 * Some government pensions and payments, including the invalidity pension.

 * Some education payments.

If the only income you receive during a financial year is exempt income you do not have to pay any income tax on it.

Taxable Income

Your taxable income is the income you have to pay tax on. It is the term used for the amount left over after you have deducted all the expenses you are allowed to claim from your assessable income.

Assessable income – allowable deductions = taxable income

The important thing to remember about deductions is that you apply them to reduce the amount of income you pay tax on when completing your tax return, you do not deduct them directly from your tax amount.

This video provides an introduction to taxable income:

[Video: What is taxable income?]

https://youtu.be/vjMSvFVWEjU?si=Y-hZCT0cU7LtM3Fe