Australian Taxation Law – PDF

TAXATION LAW

Table of Contents
..........................................................................................................................................................3
INTRODUCTION...........................................................................................................................4
QUESTION 1 ..................................................................................................................................4
a) Constitutional basis of Australian taxation system ................................................................4
b) Role of courts, Parliament and ATO in developing taxation system......................................4
QUESTION 2 ..................................................................................................................................5
Double tax agreement in Australia .............................................................................................5
QUESTION 3...................................................................................................................................5
Part 1 ..............................................................................................................................................5
a) The property owned by Indiana since November 1976..........................................................5
b) The property owned by Indiana since November 1986..........................................................6
Part 2 ...............................................................................................................................................6
QUESTION 4...................................................................................................................................7
a)Loan taken for acquiring land for the purpose of accommodation business – interest can be
claimed as deduction or not?.......................................................................................................7
QUESTION 5...................................................................................................................................7
a)Calculation of Net capital gain or loss.....................................................................................7
QUESTION 6...................................................................................................................................7
a)Sourcing two articles from Australian Financial Review........................................................7
QUESTION 7...................................................................................................................................8
a) Code of conduct of tax agents ................................................................................................8
CONCLUSION................................................................................................................................9

INTRODUCTION
Tax law is that field of legal study which deals with the common, constitutional, statutory
, tax treaties & conventions and regulatory rules that constitute the legislation for the taxation
(Woellner, R & et.al., 2016). Taxation law involves understanding, executing and defending the
payment or non payment of taxes to government. The present report is about the constitutional
basis of Australian taxation system, role of courts, parliament and ATO in developing taxation
law. Further, report will show the obligations and professional responsibilities of tax agents
under the law.
QUESTION 1
)a Constitutional basis of Australian taxation system
There are different articles and provisions in the Australian Constitution from which the
Australian Taxation system finds its basis. Different sections of the constitution are described in
brief below:
 Section 51 (ii) : This section mentions the area of commonwealth power to enact tax laws
but it should not be such that discriminates between states or any part of states.
 Section 90 : This section provides the exclusive powers to commonwealth to impose
duties of excise and customs.
 Section 114 : The mentioned section states that commonwealth cannot levy tax on the
property of state nor on states commonwealth property without the permission of each
other.
 Section 53 : This section prohibits the Senate to amend or introduce any bill which is
related to taxation, appropriation or revenues.
 Section 55 : This section states that legislation that is concerned with imposing tax shall
deal only with the imposing tax and the other supposed provision in the taxation
legislation shall be inoperative (Sadiq, K. 2019).

)b Role of courts, Parliament and ATO in developing taxation system
The segregation of powers in a democratic country is necessary for avoiding the
maltreatment of power and to protect the freedom of citizens of country. This is the reason why
different levels are formed for effective legal system. These are Legislature, Judiciary, and
Executive.
 Legislature of the country is concerned with forming of the laws for the nation. Every
bill must be passed by the Parliament and must have assent of Queen to be termed as a
enacted law.
 Executive level is responsible for implementing the law formed by the Parliament. ATO
is the statutory body of Australia which is responsible for collection of revenue on the
behalf of the Australian government.
 Judiciary or courts of the Australia is the institution that performs the duty of
interpreting the enacted law (McBarnet, 2019).
QUESTION 2
Double tax agreement in Australia
The term double taxation means imposing tax on a person by two or more jurisdictions
on the same declared income. In general, an Australian resident is liable to pay taxes on all
worldwide income whereas a non Australian resident is liable only on those which has been
generated in the Australia. However, to avoid this regime of double taxation, the country has
entered into Double Taxation Avoidance Agreements (DTAs) with more than 40 countries.
As per the case study, the US manufacturer's income generated in the Australia will be
taxable and will be liable to file a tax return. The manufacturer would be also be eligible for
exemptions if Australia has entered into a double taxation treaty with US. Since there is a treaty
between US and Australia for avoiding double taxation, the US manufacturer will be liable to
pay taxes on lower rate and will be eligible for the credit for the taxes paid in foreign country.
This has been provided in US- Australia convention where in the article 22 , it has been provided
that resident or citizen of us shall be allowed credit as to the amount paid to Australia in the form
for tax for avoiding the double taxation effect (double taxation taxes on income convention
between the united states of America and Australia, 2018).