Australian Taxation Policy and Practice

This assignment delves into the complexities of Australia's taxation system. It examines historical developments, key policies, and current challenges within the Australian tax landscape. The analysis considers various aspects like corporate tax, individual income tax, GST, and carbon tax. The assignment also explores the impact of international tax agreements on Australian businesses and individuals.

Running Head: TAXATION LAW PRINCIPLES
TAXATION LAW PRINCIPLES

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Table of Contents
Introduction............................................................................................................................3
Question 1...............................................................................................................................4
Issue....................................................................................................................................4
Law.....................................................................................................................................4
Application..........................................................................................................................6
Conclusion..........................................................................................................................8
Question 2.............................................................................................................................10
Issue..................................................................................................................................10
Law...................................................................................................................................10
Application........................................................................................................................11
Conclusion........................................................................................................................12
Reference List.......................................................................................................................13

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Introduction
This assignment has been presented with the objective assessing Australian regulatory
taxation system. While conducting process of describing and assessing current state of
Australian regulatory taxation system, emphasis will be laid on the use of two case studies
associated with taxation system in Australia. In one of the case studies, essentiality of
discussion on tax implication have been shown in case, a company’s (Aussie Ltd.)
profitability is hampered due to high level import duty incurred on annual sales. While
developing this discourse, different issues associated with taxation principles on the tax
payer’s deductible expenses have been highlighted. In another case study, it has been shown
how it is essential to address principles of deductions and capital expenses in case of tax
implications of incurred expenses. In this case study, emphasis has been laid on providing
James with suitable advice so that he can deal with tax implications of incurred expenses.
While developing diametrical discussion associated with Australian taxation system, legal
cases, rulings, and legislations have been referred, which are fundamental to Australian
taxation law. In this way, knowledge on Australian taxation system has been applied to
hypothetical situation associated with given case studies.

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Question 1
Issue
Based on discourse associated with case study, there are some issues, which have been
explored. Management of Aussie Ltd. has not shown efficiency in identifying tax related
risks in advance. The concerned organisation could not have been able to maintain integrity
in reporting with the objective of aligning tax position with law. On the other hand,
organisation’s profitability has been hampered to a great extent due to increase in spend on
advertising campaigns
From the given case study, it has been inferred that Aussie Ltd, a subsidiary of Meranti Ltd
has been facing issues due to Australian Government’s decision on incurring high level
import duty. As a result of this, annual sales of furniture have been impacted to a great extent
and for covering this loss, Aussie Ltd. has no option but to focus on spending on advertising
campaign and paying redundancy payment to employees.
However, Aussie Ltd. has shown efficiency in investing sincere efforts to averting risks
through increasing spent on advertising campaigns. In addition, company has taken
significant step through seeking Australian public to petition parliament in this return. In this
way, Aussie Ltd. has invested sincere efforts in influencing public opinion for averting risks
of high import duty.
Law
For dealing with taxation related issues, it is essential for Aussie Ltd to comply with Income
Tax Assessment Act of 1936 and Income Tax Assessment Act of 1997 so that tax
governance’s effectiveness level can be increased. In addition, it is essential to follow tax
governance related principles of Australian Taxation Office. Australian taxation is associated
with various principles with respect to deductible expenses of taxpayers.
These principles of Australian Taxation Office need to be dealt in an efficient manner so that
company can conduct its business activities without facing any issues associated with non-
compliance with existing legal framework.
 First of all, it is essential to understand tax obligations along with various aspects,
such as reporting and payment (Bell & Hindmoor, 2014). In addition, it is essential to
gain understanding on responsibilities pertinent to tax governance, administration and

TAXATION LAW PRINCIPLES 5
decision-making. Business owners need to understand taxation system related risks
along with super obligations.
 Second, it is necessary to ensure the efficacious application of controls and processes
so that compliance with super obligations and tax can be supported (Besley &
Persson, 2014). It is also important to identify and mitigate commercial tax related
risks through including tax considerations into the process of tax-decision-making.
After the identification of commercial tax related risks, it is essential to ensure
efficacious management of tax related risks so that their impact on business can be
limited.
 Third, it is essential to seek advice from Australian Taxation Office in case
organisations feel need assessing tax outcomes for business (Braithwaite, 2017).
Moreover, advice can be sought from tax professionals and advisers so that they can
provide business organisations with efficacious counsel regarding the implementation
of tax risk management system.
 Fourth, it is essential to maintain integrity in record keeping practices. At the same
time, it is essential to align tax position with existing legal framework so that tax
outcomes can be reflected in economic performance (Burkhauser, Hahn & Wilkins,
2015). As per Income Tax Assessment Act of 1936 and 1997, it is essential to keep
records and provide tax related information apart from the payment of instalments,
income tax and tax related obligations (Dabner, 2015).
 Fifth, business organisations need to adopt transparent and professional working
relationship with Australian Taxation Office so that seamless working relationship
can be created for resolving issues associated with taxation and taxation related
disputes can be avoided (Devos, 2014).
 Sixth, tax governance can be demonstrated through meeting tax related obligations. In
addition, it is important to set timeframes for tax payments and lodgements (Kenny,
Blissenden & Villios, 2015). Management of tax liabilities can bring about
effectiveness in taxation governance and management system (Doran et al.2013).
 Seventh, it is essential to resort to conducting ethical and responsible behaviour so
that honesty and integrity can be maintained while maintaining effectiveness in tax
governance along with maintenance of accuracy in reporting (Dwyer et al. 2013).
However, at the same time, it is essential to ensure avoidance of tax manipulation and
avoidance related behaviours (Eccleston & Woolley, 2014).

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In order to deal with issues faced by the respective organisation, the management level needs
to consult with tax consultants or Australian Taxation Office so that tax related matters could
have sorted out. Acquiring advice from tax consultants can help the concerned organisation in
improving sustainability of business despite Government’s decision of increasing heavy
import duty on furniture (Hasegawa & Kiyota, 2017). Failure in maintaining accuracy in
reporting has played significant role in creating average effectiveness in tax governance
(James, Sawyer & Wallschutzky, 2015). Otherwise, tax manipulation and avoidance related
behaviours could have been avoided.
Application
Based on the discussion associated with issues of taxation principles, sincere efforts can be
invested on the identification and application of relevant legal principles with reference to
case study. For dealing with importing goods in Australia, it is essential for Aussie Ltd. to
follow certain legal guidelines framed by Australian Trade and Investment Commission. For
example, Australian export and import related legislation needs to be followed for
maintaining sustainability in business operational activities (Martin, 2013). As per guidelines
of Australian Trade and Investment Commission, any business in Australia needs to comply
with import related regulations with the help of which, business can meet its goals. In
addition, compliance with Australian Trade and Investment Commission’s guidelines can
also be helpful in proving locally unavailable goods to customers (Long, Campbell &
Kelshaw, 2016).
 It is essential for Aussie Ltd. in getting to understand appropriate tariff classification
for goods. Apart from this, understanding on valuation of goods for custom duty taxes
can also be helpful for improving business profitability (Pamungkas et al. 2014). As
per Trade Practices Act of 1974 and Income Tax Assessment Act of 2016, it is
essential for every business to pay a certain amount of Australian Dollars in the form
of import duty and Goods and Services Tax, i.e. 200 Australian Dollars. Import entry
and processing related charges are also included in this charge.
 In addition, it is essential to import duty Every organisation needs to comply with
Australian Securities and Investments Commissions Act of 2001 with the objective of
protecting consumers of goods and services. In addition, direct complaints can be
lodged in case of average products’ performance. Australian Free Trade Agreements
and Australian Government’s commitment under World Trade Organisation with

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respect to Tariffs and export-import subsidies should be taken into consideration by
Aussie Ltd. so that improvement in tax governance can be ensured (Rootes, 2014).
In the case of Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq)
[2015] HCA 48, it has been shown that this case played significant role in providing certainty
to receivers, administrators and liquidators in facing no obligations in retaining amounts out
of proceeds of company’s asset sales on account of payable tax as per section 254 of Income
Tax Assessment Act of 1936 (Robson, 2014). In addition, this legal case also laid stress on
drafting Australian Taxation Office’s tax determinations on this issue. In this legal case, it has
been determined that in case of absence of assessment, liquidator is not liable to retain funds
from the sale of assets with the objective of meeting payable tax liability in the form of
capital gain on sale.
For dealing with this taxation related issues associated with taxation, Aussie Ltd. needs to
take into considerations these above mentioned legal principles, legal case law and
legislations. Compliance with these aspects associated with trade and taxation related
legislations and principles will help Aussie Ltd in dealing with import duty related issues.
Roles and responsibilities associated with accountability on tax decision-making and
administration need to be clarified and understood for improving business operational
efficiency (Saad, 2014). Furthermore, understanding on these above mentioned legal aspects
associated with trade and taxation can be helpful for concerned organisation in mitigating tax
risks and meeting tax related obligations. These can be helpful in bringing about effectiveness
in auditing system. An auditor must be appointed in concerned organisation, which possesses
knowledge on code of ethics associated with accounting bodies (Sharma et al 2014).
Accounting Professional and Ethical Standards Board related principles need to be
understood in order to maintain effectiveness in business taxation and accounting related
principles so that credibility in business can be maintained. Development of auditing strategy
will be helpful in improving effectiveness of detection and control risk level. An auditor can
play significant role in assessing control risks. Through developing internal control strategy
risks associated with auditing and taxation can be minimised. In addition, effectiveness can
be maintained in management decision making thereby resulting in making business proves
effective. Effective level of internal control can also play significant role in ensuring that
business transaction can be carried out in accordance with authorisation of management.
Australian Auditing Standards Compliance with Corporations Act 2001 will be utilitarian for
concerned company in maintaining effectiveness in business operations.

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In order to mitigate business risks, it is essential to ensure that management controls can be
strengthened. Business risks can be mitigated through monitoring business risks. Along with
it, the policies associated with these risks need to be defined in such a manner that concerned
company can strengthen its defence against business risks. In this way, business profitability
level can be increased.
 It is essential to perform certain control related activities, such as accounting with
respect to transaction related sequence, calculations associated with transactions,
setting lists of prices, determining limits of credit for sales and so on (Smith, 2016).
 It is also essential to ensure review of subsequent payments. Independent review
associated with business transaction around balance data of account coding can play
significant role in improving effectiveness of current account practices of concerned
company, i.e. Aussie Ltd.
From above discussion, it can be understood that taxation is significant role player in the
context of a company, country and overall economy. For making discussion analytical,
descriptive and informative, various legal case examples have been cited along with
legislations. It has been inferred from diametrical discussion that it is very important to gain
understanding on taxation related concepts for improving business profitability. A country’s
Government would able to mobilise substantial amount of revenue with the help of taxation.
Reduction in income inequalities can be ensured through following taxation related policies.
In the context of regional development, taxation is significant role player.
Conclusion
Aussie needs to make arrangements for ensuring that its audit related policies are assessed in
every year with the help of auditors and auditors must be key role players in the context of
ensuring the identification of business risks. Performance of tax governance system can be
monitored through the optimal utilisation of performance indicators as well as benchmarking.
In this way, Aussie Ltd. will be able to improve business performance and strengthen its
position against Australian Government’s decision on imposing high level importing tax. At
the same time, it is required to lay emphasis on consulting with tax consultants so that it can
be understood what measures should be adopted for improving effectiveness of tax
governance. The given legal case and legislations along with legal principles will be helpful
in improving business performance of concerned company.

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In addition, effective implementation of the auditing process can be helpful in improving
financial profitability and effectiveness of business operations thereby resulting in making
business entity less vulnerable to business and accounting related risks. The mentioned case
study, legal principles and legislations will be helpful for concerned business entity in getting
to understand nature of business risks and what appropriate measures ought to be adopted for
improving business performance. It will also be helpful in dealing with Governments with
respect to importing duty and it can be expected that Government may consider decreasing
import duty in future for the sake of globalised business. Apart from this, media attention
needs to be attracted for

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Question 2
Issue
From given case study, it has been inferred that James has faced various problems purchasing
a block of five flats, such as improper maintenance, plumbing and roofing. Because of the
occurrence of these issues, James had to spend a lot of money so that preventive measures
can be taken for improving condition of building. However, at the same time need for dealing
with tax implication has been arisen, which is necessary for ensuring sufficient rate of return
against investment with respect to building purchasing. For dealing with tax implications
associated with incurred expenses, it is essential to follow process and procedures associated
with auditing in an effective manner. It is necessary for concerned business entities to follow
effective auditing process with the objective of improving effectiveness of accounting and
business practices. Initially, concerned business entity needs to assess risks of associated with
building development process (Taylor & Richardson, 2013). After that, it is essential to
perform thorough analysis with respect to building development and purchased based on
which potential risks can be identified and assessed in a critical manner. Control and other
process associated with the procedures of addressing risks can be assessed thereafter.
Analytical procedures need to be implemented for improving for getting to understand nature
of risks. Effectiveness of control procedures needs to be assessed in a critical manner. Entire
auditing process can be communicated to different users for the purpose of validating its
effectiveness.
Law
For illustrating discussion on statutory deductions- be it general or statutory, it is essential to
gain understanding on certain things, such as PAYG Withholding and Higher Education
Scheme, Income Tax, Medicare Levy and so on. As far as PAYG Withholding and Higher
Education Scheme is concerned, employers are the significant role players in this context
since they withhold additional amount from remunerations and wage income in order to
cover compulsory repayment. PAYG or Pay As You Go is an instalment system according to
which, it can be possible to make regular payments towards expected tax liability in case of
improvement in investment income (Yu-ling & Bureau, 2015). Tax can be paid in instalments
throughout the year and it is not necessary to take measures for lodging tax return. At the
time of making PAYG instalments, it is essential to take debt into account. For individuals, it
is required to ensure payment of instalments in case of payment of 4,000 Australian Dollar

TAXATION LAW PRINCIPLES 11
(Gilley, 2017). PAYG instalment obligations can be managed and paid through online mode
and website of Australian Taxation Office needs to be used for paying online instalment
obligations.
Application
In Australia, it is essential to pay income tax on a certain amount of taxable income. If a
person earns or possess property worth more than 87,000 Australian Dollars, 22.78 to 30.13
percent income tax can be incurred. For dealing with income tax related issues, it is essential
for James to gain understanding on income tax related information applicable in Australia.
Through gaining knowledge on taxation, James can be enabled in complying with existing
legislations associated with purchase of building. For gaining knowledge on income tax, it is
essential for people to gain understanding on different aspects of Income Tax Assessment Act
of 2016 (Collins, 2017). In addition, Australian Taxation Office can be consulted in this
regard so that sufficient and satisfactory counsel can be acquired with respect to taxation
system.
Medicare Levy can be taken into considerations for getting to understand importance of
healthcare and health maintenance at the time making purchase of fixed assets like building
purchase. A person or tax payer needs to pay 2 percent of total taxable income in the form of
Medicare Levy (Apps, Long & Rees, 2014). It is regarded as progressive income tax related
levy, which plays significant role in financing Medicare. In this context, it can be said that
Medicare is one of the prominent national healthcare related scheme.
Apart from statutory deductions, there are general deductions too and they are not considered
as beneficiary. In this context, example of charitable deductions and garnishments can be
cited. These deductions are not considered valuable in terms of achieving commercial
purpose.
As far as capital expenses are concerned, it is considered as an amount, which is spent to
acquire long-term asset, such as buildings. For dealing with capital expenses, like building
purchase, it is essential for James to understand valuation of building before making
purchase. Based on understanding associated with valuation of building, James can opt for
purchasing buildings. Profit earning capacity can be improved with the purchase of fixed
assets like building (Mates et al. 2016). In addition, purchase of fixed assets like building can
make James beneficiary in terms of acquiring and ensuring revenue generation.

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Conclusion
From entire discussion, it can be understood that capital expenses and deductions need to be
taken into considerations in order to make purchasing process of fixed assets effective.
Auditing process and risk analysis process can be implemented with the objective of
improving financial profitability. In addition, it is important to perform risk analysis with the
objective of averting any kind of risks at the time of making purchase. Therefore, principles
of capital expenditure and deductions need to be taken into considerations for improving
business profitability level. James needs to take into considerations these aspects along with
existing legal framework. It will be utilitarian for James in getting to understand importance
of taxation and deductions at the time of making purchase of fixed assets. Effective tax
governance system can be helpful in controlling inflation too. For dealing with taxation
governance related issues, it is essential to deal with effective business and corporations
related legislations and principles. Taxation plays significant role in ensuring that foreign
exchange can be earned through promotion of exports. In addition, social welfare can be
promoted and generated through taxation and its role in undeniable when it comes to matter
of ensuring economic development. However, it is required to consider improving
effectiveness of tax governance policies and mechanisms along with auditing procedures so
that improvement in business process can be brought about. Along with that, it is also
essential to update understanding and knowledge on taxation policies and standards for
improving business performance.

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