Xero’s free income tax calculator

List all your sources of income – including any second jobs, business earnings, and rental income. Add these up and put the total at the top of the template. Then work out your total business expenses – things you bought to help with your work, like office equipment, phone bills, and vehicles. Next, enter your personal deductions (your tax-free income). The income tax calculator then works out your taxable income for you.

On the left-hand side of the income tax calculator, enter the income tax rate. The template will automatically calculate the correct amount.

Businesses in other countries sometimes pay extra taxes. For example, a UK business might pay VAT (Value Added Tax), and a US business might pay SE (self-employment) tax. Though there’s nothing for you to worry about now, you’ll need to know about these taxes when trading internationally.

Now, the things that lower your tax bill! Do you get a tax offset for your health insurance premium? How about a childcare subsidy? Check the government website to see which credits you’re eligible for, then enter the amounts they’re worth on the right-hand side of the income tax calculator.

And that’s it! The income tax calculator works out your total estimated tax liability. It might show you owe an amount in tax, which you’ll pay after your next tax return. Or – if your tax liability is less than what you’ve already paid (through withholding amounts, say) – you might get a refund from the tax office. Please note: the income tax calculator gives you an approximation – your final tax filing may calculate a different amount, so be sure to keep accurate tax records during the year.

With an estimate of how much tax you owe, you’re in a much better position to look ahead with your finances and budgets, make substantial business decisions, and set aside money for your tax bill. And if you estimate your income tax early enough in the financial year, you’ll have plenty of time to prepare for your tax filings. Business partners and sole traders must file their income taxes between 1 July and 31 October. If you’re using a registered tax agent, check the date with them.

The income tax calculator is designed for small business owners, freelancers, and anyone self-employed. It replaces manual calculations and time-consuming spreadsheets with a simple-to-use template, so you can confidently estimate your tax bill.

Xero’s template gives you an estimate of how much tax you owe instead of a guaranteed figure. The more accurate the numbers you enter – for your expenses, credits, and so on – the more reliable the calculations. Talk to a tax professional for advice on your income tax if you have any questions.

No – the person receiving child support doesn’t pay tax on this income. The tax office doesn’t levy tax on child support payments, in the same way it generally doesn’t impose tax on children’s clothing, car seats, and books.

Absolutely – just add up your incomes and enter the total at the top of the income tax calculator. Do the same for your business expenses and personal deductions. The calculator then gives you the total estimated amount of tax you’ll owe for all your income sources. However, keep in mind the calculator only applies a single tax rate to the total income.

As often as you need to. Use the tax liability calculator whenever you plan your finances – maybe you’re thinking of increasing your daily rate, or seeing how much money you have left after paying your tax bill this year. Save the small business tax estimator to your desktop so you can quickly do the maths.