Calculations
Updates to calculations for Year 1 are currently in progress
If you’re new to financial projections, start with our overview: Generic article on how Financial Projections work
How we account for cash flow in your first year
Your plan in Canwi is always projected and displayed in calendar years (Jan–Dec) so it’s easy to follow. Tax in Australia is calculated on a financial year (1 July – 30 June). In the background, we line these up so your plan is accurate.
Example: Plan starting March 2024
Assume:
Salary = $100,000 per year
Living expenses = $3,000/month
Debt repayments = $1,000/month
Here’s how we project your first year (March–Dec 2024):
March - June 2024 (4 months left in FY24):
Income: $33,333 (4/12 of $100k)
Expenses: $12,000 (4 × $3,000)
Debt repayments: $4,000 (4 × $1,000)
Tax: calculated for this portion of the financial year. We assume your salary has been consistent since July 2023, so we can correctly pro-rate income tax and deductions for this stub period.
July - Dec 2024 (6 months in FY25):
Income: $50,000 (6/12 of $100k, plus any wage growth if set)
Expenses: $18,000 (6 × $3,000)
Debt repayments: $6,000 (6 × $1,000)
Tax: withheld for the first half of the new financial year (FY25).
What you’ll see in Canwi:
Total income = $83,333
Total Tax = $18,990
Total expenses = $30,000
Total debt repayments = $10,000
Tax withheld = pro-rated across both FY24 and FY25
Net cashflow = Income − Tax − Expenses − Debt
Order of operations
The financial model in Canwi follows a structured sequence to calculate yearly projections. The model iterates year by year, taking into account various financial factors, modifying them based on events, and computing the impact on assets, liabilities, income, expenses, and tax.
Step 1: Establish Initial Values
At the start of each year, the model retrieves or initializes key financial values from the previous year including:
Cash Balance
Asset Values
Liability Values
Income Values
Expense Values
If it's the first year, these values are derived from declared initial values.
Step 2: Event Impacts
We determine & implmenent the impacts from any events such as promotions, buying assets etc (as we assume these all occur either Jan 1 of the year they've been added to, OR in the first year of your plan on the 1st day of your plan's start month).
Events (such as life events) impact financial figures, but not all events require knowledge of taxable income. This step applies only non-income-dependent events to:
Income (modifications to income sources)
Expenses (modifications to recurring and one-time costs)
Assets (contributions to investment assets)
Liabilities (changes in outstanding debts and repayment schedules)
Step 3: Apply Asset and Liability-Based Impacts
Once non-income-dependent modifications are applied, additional financial impacts are calculated based on existing assets and liabilities. This includes:
Asset Impacts (e.g., dividends, rental income, interest)
Liability Impacts (e.g., loan repayments, interest costs)
Income Impacts
Expense Impacts
These impacts are then applied to update the respective financial categories.
Step 4: Apply Growth Calculations
Now that all modifications have been incorporated, the system calculates growth for different financial components:
Asset Growth (e.g., capital appreciation of investments)
Liability Growth (e.g., remaining loan balance changes due to repayments and interest)
Income Growth (e.g., salary increases, wage growth)
Expense Growth (e.g., inflation adjustments on living costs)
Step 5: Calculate Cashflow Impacts
At this stage, the model calculates all financial inflows and outflows:
Income-Driven Cashflow Impacts (salary, business revenue, rental income, dividends)
Asset and Liability-Driven Cashflow Impacts (loan repayments, investment contributions)
Expense-Driven Cashflow Impacts (recurring bills, one-off expenses)
Non-Income Event Cashflow Impacts (from earlier event modifications)
Step 6: Determine Taxable Income & Taxation Impacts
Once all cashflows are determined, taxable income is calculated based on:
Taxable Income Impacts (salary, investment income, deductions)
Superannuation Contributions (from employment or voluntary contributions)
Tax Details Computation (income tax, Medicare levy, HELP debt repayments)
This produces an after-tax cashflow balance for the year.
Step 7: Recalculate Event Impacts (Income-Dependent Events)
Now that total family taxable income is known, the model reevaluates events that are dependent on income (e.g., means-tested government benefits or income-adjusted costs). These new event impacts are applied similarly to Step 2.
Step 8: Compute Net Cashflow and Ending Balances
With all cashflows and tax adjustments in place:
Net Cash Impact is computed (Cash In - Tax - Cash Out)
If Cash In - Tax - Cash Out is < 0 then a Cash Alert is generated which is displayed on the planning screen at the top of a year.
Ending Cash Balance is determined (Starting Balance + Net Cash Impact)
If End of Year Cash balance is negative a Cash Alert is generated
Asset Values are Updated to reflect the new balances
Liability Values are Updated to include repayments and interest
Final Tax Summary is recorded.