Usually because “profit” and “taxable income” are not the same number, and because a tax bill can bundle in things that aren’t this year’s tax at all — like PAYG instalments toward next year, or the tax on money you drew from a company. Loan repayments, asset purchases and drawings also don’t reduce taxable income the way people expect.
What it depends on
Where judgement stays human: Reading which part of a bill is real tax versus a pre-payment, and whether a Division 7A issue is lurking, takes a trained eye — and it’s the difference between a nasty surprise and a plan.
Your accounting profit is revenue minus expenses in your books. Taxable income adds back things the tax law doesn’t allow and removes things it does — so the two rarely match. Then the ATO often includes PAYG instalments, which are pre-payments toward the coming year, making the total look larger than a single year’s tax.
The other classic trap is cash that felt like profit but wasn’t: repaying the principal on a loan, or drawing money out of a company, doesn’t lower your tax the way paying a supplier does. So the bank balance and the tax bill tell different stories.
Reading which part of a bill is real tax versus a pre-payment, and whether a Division 7A issue is lurking, takes a trained eye — and it’s the difference between a nasty surprise and a plan.
Sydney Accountants · general information current as at 1 September 2026. This is general information only, not personal financial, tax or legal advice.