A Taxation Law of Australia - Assignment Example

Name Instructor Subject Date Australian Taxation The Income Tax Assessment Act 1997 is used by the Board of Taxation in conjunction with the Australian Taxation Office to control the Australian taxation system. The act outlines various aspects of taxation such as assessable income, tax offsets, deductions and how tax figures are arrived at. This paper seeks to explore the various functions of government organs that regulate tax processes in Australia, the fundamentals of tax legislation and the application of tax laws in calculating tax. BOARD OF TAXATION The Board of Taxation acts as a non-statutory, independent body that advises the Australian government on the ongoing operation of the tax system and the development and implementation of legislation associated with tax (Australian Government). CHAIRMAN OF THE BOARD OF TAXATION Appointed to the position of the Acting Chairman in March this year, Mr Chris Jordan AO is also the chairman of KPMG New South Wales and he previously held the position of the head of Tax and Legal Division in the same company. He has been a member of the Board of Taxation since its inception and rose to the position of Deputy Chairman at the start of the year 2005 (The Board of Taxation). INFORMATION REGARDING THE AUSTRALIAN TAXATION OFFICE AND WHAT THEY DO The Australian Taxation Office is the main revenue collection agency for the government. It operates as part of the Treasurer’s portfolio with the duty to manage tax related systems. Information on the ATO can be found on the Australian Government website on Australian Taxation Office (Australian Taxation Office, “About Us”) THE TAXPAYER’S CHARTER AND DISCLOSURE OF INFORMATION TO OTHER PARTIES Under the Privacy Act 1988, provisions are in place to safeguard a taxpayer's information. Tax officers are only allowed to have a look at the information, record it, discuss it or disclose the information only when their duties stipulate that doing so is a part of their job, or the law specifically allows them to. Anyone outside the ATO, even the media, having obtained the information illegally, cannot record, disclose, communicate or make use any of the information so obtained (Australian Taxation Office, “Taxpayers' charter - respecting your privacy and confidentiality”). CIRCUMSTANCES ALLOWING DISCLOSURE In order to balance the safeguarding of an individual's privacy with the interests of the public, there exists a special circumstance under which disclosure is permitted. Part of these circumstances includes disclosing the information so as to check an individual's eligibility for benefits from the government and for reasons of law enforcement. The information can also be disclosed to special advisers and persons contracted to carry ATO's duties. Once disclosed, other organization's can only make use of the information only for the purpose for which disclosure was made to them and the information is still covered by the Privacy Act and the provisions of secrecy in the tax laws (Australian Taxation Office, “Taxpayers' charter - respecting your privacy and confidentiality”). HOW S 4-15 ITA A 1997 REQUIRES ONE TO WORK OUT THEIR TAXABLE INCOME Section 4 stipulates how to calculate the income tax payable on one's taxable income. It outlines who pays tax and how tax is calculated. Section 5 outlines how to figure out when one pays their income tax. If the assessed tax on income liability is in excess of the available credits for a person under the PAYG system, this Division outlines when the excess must be paid to the Commissioner. If an assessment is amended such that one must pay income tax, or pay additional amounts than under the previous assessment, this Division stipulates when one must pay the additional tax and when any associated interest charges are payable (OLDP 17-19). Section 6 describes the assessable income and income that is exempt. It differentiates ordinary income, from statutory income and non-assessable, non-exempt income. It also lays out the relationships among the rules governing personal income. One has to consider the deductions relevant for their case as section 8 defines them. In this section, there are general deductions, specific deductions and a clause is inserted stipulating that there should be no double deductions (OLDP 21-27). The entities that must pay income tax are outlined in section 9, with section 10 giving particular kinds of assessable income and section 11 outlining particular kinds of non-assessable income. Particular kinds of deductions are covered in section 12 and tax offsets are covered in section 13. Under section 15, some items of assessable income which are included in one's assessable income are given. General rules on assessable income from section 6 are still applicable to these items (OLDP 28-89). SECTION OF THE ITA A 1997 THAT CONSIDERS ALLOWABLE DEDUCTIONS Section 25, “Some amounts you can deduct”, Considers Allowable Deductions. This section describes some deductible amounts. However, the general rules on general deductions in section 8 apply to this section (OLDP 126). ITAA 1997 SECTION ON VALUE OF ALLOWANCES IN ASSESSABLE INCOME Section 15, referred to as “Some items of assessable income”, includes the value of allowances in assessable income. The allowances can be in any form as stipulated by provisions of the Income Tax Assessment Act 1936 in division 21A that includes assessable income as income from barter trades and non-cash (OLDP 84) TD 2010/5 Taxation Determination TD 2010/5 sets out the cents per kilometre rates for private use of motor vehicles for the FBT year starting 1 April 2010. For vehicles over 2500cc, the applicable rate is 54 cents (Australian Taxation Office, “Taxation Determination TD 2010/5”) TAXATION RULING TR 2010/1 This Ruling discusses contributions remitted to a superannuation fund, an deposit fund which is approved or a retirement savings account. The ordinary meaning of the word 'contribution' in its use in relation to a superannuation fund, an approved deposit fund or a retirement savings account in the Income Tax Assessment Act 1997 is considered (Australian Taxation Office, “Taxation Ruling TR 2010/1”). JULIETTE’S CASE Assessable income includes the gross income directly and indirectly derived from all sources in outside Australia for a resident taxpayer. If the taxpayer is a non-resident, assessable income is the gross income, which is not exempt income, derived directly or indirectly from all sources in Australia. Juliette thus is not liable to pay tax for income from the furniture sold during her stay in Sydney during her bus trip because the income source was not in Australia and she was a temporary resident (Parsons 77). When she flies to the UK to look after her mother and returns to fulfill her contract, her travel cannot be considered as travel between workplaces since she had not started her duties when she flew out, and she was traveling to her country of residence. Juliette starts her contract on May and leases a flat. She becomes qualified for a deduction on her assessable income as per the stipulations outlined in section 25. The expenses incurred in preparing lease documents and in preparing the leased property, which she did by buying furniture, are deductible as she uses her leased flat to enable her to earn her assessable income. Her income is assessed as that of a non-resident and only Australian sources of income are liable for taxation, so income from her contract is assessable (OLDP 145). The act of buying a house makes her to qualify for a deduction for expenses of discharging the mortgage and with the onset of her marriage to Romeo she legally becomes a resident of Australia. She is then liable to pay tax for income from in and out of Australia that is assessable. Her return to England to look after her mother qualifies her for a deduction for travel expenditure since she travels from where she worked to another place where she continued with her duties that earned her assessable income. This is travel between workplaces. At this time, her payment by her mother is taxable even if she earns it outside Australia since at this point she is a resident of Australia (OLDP 41). Her interest earned from offshore banking a activities is also taxable (OLDP 33) Her return to Australia on 15th April cannot be considered to be travel between two workplaces since the contract had ended and thus the business that she had engaged in activities at the first place had ceased (OLDP 33). Conclusion The Income Tax Assessment Act 1997 is used to regulate taxation procedures in Australia. According to the act, residents and non-residents are liable for taxation in Australia depending on their income source and on whether the income is assessable for tax. The process for evaluating tax is outlined in s 4-15 of the act and it incorporates the deductions applicable to assessing taxable income. The board of Taxations acts as the government's adviser on tax matters, with the Australian Tax Office collecting the tax and filing the tax records. The records on individuals at the Australian Tax Office are strictly controlled by privacy laws and access to the information is only for the staff at the office whose duties include accessing the documents. The staff is not allowed to disclose the information to other parties in any circumstances, save for circumstances allowed by law. In cases where services are outsourced or information is revealed for law enforcement purposes, the same privacy laws are applicable and they also cover cases where the information is disclosed to the government for benefits evaluation. Various amendments are made to the Income Tax Assessment Act 1997 and these determine tax rates or provide clarity on various taxation issues. The Taxation Ruling TR 2010/1 seeks to provide clarity on contribution to specific funds and accounts, with the Tax Determination TD 2010/5 sets the amounts payable per kilometer for motor vehicles. Works Cited Australian Government. “ Board of Taxation ” 2011. Web. 8 April 2011. Australian Taxation Office. “ About Us ” 2011. Web. 8 April 2011. ---.“ Taxpayers' charter - respecting your privacy and confidentiality” 2011. Web. 8 April 2011. ---. “ Taxation Ruling TR 2010/1 ” 2011. Web. 8 April 2011. ---. “ Taxation Determination TD 2010/5 ” 2011. Web. 8 April 2011. OLDP. Income Tax Assessment Act 1997. Sydney: Office of Legislative Drafting and Publishing, 2010. Print. Parsons, R. W. Income Taxation in Australia: Principles of Income, Deductibility and Tax Accounting. Sydney: University of Sydney Library, 2001. Print. The Board of Taxation. “ Board Members ” 2011. Web. 8 April 2011. < http://www.taxboard.gov.au/content/Content.aspx?doc=about/board_members.htm> Read More