Overview of the income tax calculation

Modified on Wed, 01 May 2024 at 09:35 AM

We designed the income tax calculation in a way that takes you from the starting point of adding a trial balance of accounts, through workpapers where you can record adjustments, to the tax outputs, including the Statement of Taxable Income. The system will automatically produce various tax provision reports, including the tax notes, and tax return.

You can view our support articles for Income Tax here: Income tax calculation

Here are some steps to follow from start to finish, with quick links to the relevant support articles:

Import the trial balance from Xero or Excel.
- If this is the entities first year in TaxLab, assign accounts to the Balance Sheet and Income Statement.
- Remember to Exclude tax expense accounts from the profit before tax (PBT).
- Optional: assign accounts to the IR10 categories.
Add the relevant Workpapers to accounts or directly in the entity.
- Optional: If workpapers aren’t required you can Select the Tax form disclosure type in the account.
Review the tax calculation and the income tax position.
View, edit and complete the return.
E-file the return with the Tax authority.
Roll over to the next tax year.

Income tax is organised into five main areas:

Accounts	This is where you add the entity’s trial balance and add workpapers for adjustments.
Workpapers	This is where you add workpapers against the entity (not linked to an account), review the workpapers that were added to the accounts, and address and close any queries that were posted to the accounts.
Capex	This is where you record the entity’s Capex registers.
Offsets	This is where you include tax losses from a prior year or other source or outgoing and incoming distributions. Such as Tax Losses and Residential Rental Properties
Credits	This is where you add tax credits or payments that can be used to offset the tax liability and/or have an impact to the imputation credit.