Canwi groups all income sources in a given year into Total Gross Income / Inflows. We also track whether an income source is taxable. For example:

🔗 Read more: Key Definitions of Income for Tax Purposes

Canwi works out your tax the same way it happens in real life, in two steps:

The difference between the two is your tax refund or tax bill, and it flows into your cashflow.

Tax is calculated separately for each person in your plan.

During the year, Canwi withholds tax from your employment income and miscellaneous income, the way your employer would. This is why your take-home pay in Plan Tables is lower than your salary.

Plan Tables - collapsed view of an income

Plan Tables - expanded view of an income (Showing the gross income and PAYG Tax Withheld)

Tax isn't withheld from investment income, like rent, dividends or capital gains. The tax on these is worked out when your tax for the year is calculated, so they usually add to your tax bill or reduce your refund. For example, if you sell shares at a profit, expect a bigger tax bill that year.

At the end of each financial year, Canwi works out what you really owe:

1. Assessable income. All your taxable income for the year: wages, rental income, interest, dividends and capital gains. Some money you receive isn't taxed, like gifts, inheritances and some government payments. It counts in your Total Gross Income but not your Assessable Income. Read more: Key definitions of income for tax purposes

2. Deductions. Canwi subtracts deductions automatically, like investment property expenses, depreciation, interest on investment loans, and any living expenses you've marked as tax deductible. What's left is your Taxable Income.

3. Income tax. Tax is applied progressively using the tax brackets for that year (see below).

4. Tax offsets. Offsets reduce your tax directly. Canwi applies:

LITO and WATO are non-refundable: they can reduce your tax to zero, but not below.

Franking credits are refundable: if they're more than the tax you owe, you get the difference back as a refund. This is common in retirement, when your taxable income is low but your shares still pay franked dividends.

5. Other amounts. Canwi also adds:

6. Refund or bill. Canwi compares what you owe with what was withheld through PAYG. If more was withheld, you get a refund. If less, you have a bill. The refund or bill shows in the Tax row of Plan Tables. It lands in the calendar year the financial year ends. For example, the refund or bill for FY28 (July 2027 to June 2028) shows in 2028.

Your plan runs on calendar years (January to December), but Australian tax works on financial years (July to June). Canwi calculates tax for each financial year and maps it into your plan.

In the yearly breakdown, the Tax tab is labelled with the financial year. For example, Tax (FY28) covers July 2027 to June 2028.

If your plan starts part-way through a year, your first year is shorter. You'll see it labelled in Plan Tables, e.g. "2026 (3 months)", and income and tax for that year will be lower.

Australia uses a progressive tax system, meaning not all your income is taxed at the same rate. Instead, tax is applied in brackets, with higher rates only applying to the portion of income that falls into higher brackets.

Income tax is applied to an individual's taxable income and is paid on all forms of income. This includes wages from your job, profits from business, and returns from investments. Income tax can also apply to assets such as when a house or shares are sold.

If you earn $150,000, your income is split across multiple tax brackets:

💡 A common misconception is that earning more pushes all your income into a higher tax rate. In reality, only the portion in the higher bracket is taxed at that rate.

We end up paying a total of $36,836 in tax, which is an effective tax rate of ~25%.

Another area of confusion is Capital Gains Tax (CGT). Many people assume CGT is a separate tax, but it’s not - it’s simply treated as another form of income.

When you sell an asset (like shares or property) for more than you bought it, the profit (capital gain) is added to your taxable income for that year.

If you’ve held the asset for more than 12 months, you may be eligible for a 50% discount (or cost based indexation after July 2027), meaning only half of the gain is taxed.

Example: How Capital Gains Are Taxed

This means capital gains don’t have a separate tax rate - they just increase your total taxable income and are taxed using the same marginal tax brackets.

Does Canwi calculate PAYG?

Yes. Canwi withholds tax from your pay during the year, then works out your actual tax for the financial year. The difference is your refund or bill.

Why is there a positive amount in my Tax row?

That's a refund: more tax was withheld through PAYG than you owe. It's often from a tax offset PAYG doesn't account for, like the $250 Working Australians Tax Offset or Franking Credits.

Why is my first year's income so low?

Your plan probably starts part-way through the year, so the first year is shorter. Plan Tables labels it, e.g. "2026 (3 months)". From the first full year, income and tax look normal.

Which tax offsets does Canwi include?

The Low Income Tax Offset (LITO), the Seniors and Pensioners Tax Offset (SAPTO), the Working Australians Tax Offset (WATO, from 2027–28), and franking credits on dividends. Franking credits are refundable, so they can give you a refund even if you owe no tax. The Low and Middle Income Tax Offset (LMITO) ended in 2021–22 and is not supported in Canwi.

Are Family Tax Benefits included?

Yes. Family Tax Benefit Parts A and B are calculated from your plan and show under Government Benefits on the Income page. They're not taxable, so they don't appear in your tax calculation.

Does Canwi include the Medicare levy surcharge?

Yes, if your income is above the threshold. Set whether each person has private hospital cover on the People page.

Is my tax calculated individually or as a couple?

Individually, like in real life. Some thresholds use family income, like the Medicare levy surcharge and Family Tax Benefits.

Does Canwi use the 50% CGT discount?

Yes, for gains made up to 30 June 2027. For gains from 1 July 2027, Canwi uses cost base indexation, in line with the 2026–27 Budget changes. If you hold an asset across that date, the gain is split between the two methods. See Capital gains tax above.