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Seven steps to heaven

12 May 2015 / Julie Cameron
Issue: 4500 / Categories: Comment & Analysis , Income Tax

Calculating an individual’s income tax liability


  • The seven steps comprising the basic tax calculation are in ITA 2007 s 23.
  • Establishing the amounts and types of income.
  • Reliefs have to be set against the relevant income.
  • Seven rates of income tax apply for 2014/15.

It is January. You have hit the send button on the last tax return you intend to complete that day and you are logging off when the phone rings.

It is a client who has just received her tax return.

She is worried because she has an unusually high income tax liability that she wants you to explain.

You give her a non-committal answer about changes of tax rates allowances and payments not made but it becomes clear that she wants you to explain exactly how the tax computation...

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