Australian Tax Law - Income Deduction, FBT, GST, CGT, Anti-Avoidance Provisions and Income Administration

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AUSTRALIAN TAX LAW
Australian Income Tax
Institution
Date

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AUSTRALIAN TAX LAW
EXECUTIVE SUMMARY
The objective of this report is to equip the student with the knowledge and understanding of
concepts of income deduction, FBT(Fringe Benefit Tax),GST(Goods and Service Tax),
CGT(Capital Gain Tax), anti avoidance provisions and income administration according to the
Australian income tax system. The report also aims at enabling the learner to demonstrate and
understand the principles of a good tax system.
A practical approach to the concepts and tax legislations has been shown by Emma and City Sky
Co ltd.

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AUSTRALIAN TAX LAW
Table of Contents
EXECUTIVE SUMMARY................................................................................................ 2
INTRODUCTION........................................................................................................... 3
INCOME TAX............................................................................................................ 3
CGT-CAPITAL GAIN TAX........................................................................................... 3
Resident Individual.................................................................................................... 4
Non Resident............................................................................................................ 4
GST-GOODS AND SERVICE TAX.................................................................................4
FBT-FRINGE BENEFIT TAX......................................................................................... 5
AUSTRALIA TAX SYSTEM.......................................................................................... 5
Withholding tax........................................................................................................ 5
Self assessment tax.................................................................................................... 5
Anti - avoidance provisions under GST...........................................................................6
TAX LEGISLATION....................................................................................................... 6
TAXATION PRINCIPLES................................................................................................ 9
REFERENCES............................................................................................................. 10

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AUSTRALIAN TAX LAW
INTRODUCTION
The federal government has the mandate to oblige tax to residents of Australia and foreigners
residing in Australia .the tax charge apply to those non residents who work in Australia and
whose tax is within the taxable income bracket. The Australian legislation has rules and
regulation on how to identify a resident individual or a company. In addition, the law also
determines the source of income if it is within Australia or outside. Generally; taxation is levied
from the location or place of work. Resident and source rule is commonly used in many
countries; however it has its challenges. Individual or a company’s earning may experience
double taxation (taxed in two countries).in order to avoid double taxation, Australian government
approved double tax agreement with other countries. The purpose of double tax assent is to
ensure income is levied once.
INCOME TAX
Income tax is an individual or company’s assessable pay after acceptable deductions. Wages,
business earnings, salaries, dividends and interests are some of the assessable income (Evans,
2019, pg.217).expenses and costs incurred on the process of creating an income are deducted.
Personal and capital expenses however are not deductible. A deduction on such expenses
happens only when certain conditions are met (Anesa et al.2019, pg.79).
CGT
(Capita gain tax )
Capital Gain Tax is levied on proceeds gained from selling an asset. CGT is charged on Fixed
and current assets however assets like homes and motor vehicles have exemptions. For non
residents, assets like real properties are subject to capital gains. In Australia, a resident is allowed
a discount 50% tax on assets held by a company or an individual for more than 12 months.
After the amendment made to ‘capital gain tax rule’, foreign taxpayers were given capital
earnings as a compensation to capital loss instead of 50% discount on tax.
One is legally obliged to pay duties on capital income or gains as stipulated in the
rules .Australian residents and non residents have the responsibility of paying CGT- capital gain