Taxation Theory Practise Law Report 2022

Running Head: TAXATION THEORY, PRACTICE & LAW
Taxation Theory, Practice & Law
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1 TAXATION THEORY, PRACTICE & LAW
Executive summary
This report is discussed about the Australian accounting system and its different
concepts like GST and capital gain tax. Then the City Sky co is advised about the input
tax credit that they can avail. And lastly Emma’s capital gain has been calculated to find
the capital gain tax.

2 TAXATION THEORY, PRACTICE & LAW
Table of Contents
Introduction........................................................................................................................3
Goods and Service Tax (GST)..........................................................................................3
Capital gain tax..................................................................................................................3
Question 1..........................................................................................................................4
Question 2..........................................................................................................................6
Conclusion.......................................................................................................................10
Reference list...................................................................................................................11

3 TAXATION THEORY, PRACTICE & LAW
Introduction
With the growth of the country Australian taxation system has also grown
significantly. Australia tax to GDP ratio is around 11 percent which remained constant
until the introduction of federal income tax. Federal government relies on direct tax as
the primary tax collection. In past 30 years both personal and business taxation has
changed to income tax and GST (Adair et al., 2013). Standard year of income for tax
calculation is from 1st July to 30th June which can also be changed by the Australian
commissioner according to the need. Income tax for companies irrespective of
residential status is 30 percent. Australian taxation system allows the Australian
company to pay tax and take credit on the tax paid. Deduction is allowed for decline in
the value of depreciable assets which was used for generating income.
Goods and Service Tax (GST)
Goods and service tax is a tax of 10 percent on most of the goods and services
that are sold or consumed in Australia. Companies register under GST will have to put
GST in there invoice for goods and services and they can claim for credit on the GST
paid on purchase invoice. Company need to register under GST when the turnover is
more than $75000 and $150000 for non-profit making organization (Auerbach et al.,
2013).
Capital gain tax
Capital gain tax or CGT is the part of the income tax which is chargeable on the
positive amount of difference between the sale price of capital asset and its original