Tax Administration

Question 1

What is Taxable Income & how to work it out

Answer 1

Taxable Income s4-15 = assessable income less allowable deductions

Question 2

two components of Assessable income

Answer 2

1. Ordinary income ITAA97 s6-5 e.g. salaries received, business income, rent from an investment property.
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2. Statutory income ITAA97 s6-10 e.g. capital gains ITAA97 s100

Question 3

two main components of allowable deductions

Answer 3

1. General deductions, which are incurred in gaining the assessable income but exclude capital and private expenditure ITAA97 s8-1. Examples include the rent of a shop or staff wages, but exclude the purchase of a plant for the factory, which is a capital expense.
2. Specific deductions ITAA97 s8-5 depreciation or donations.

Question 4

Who pays income tax

Answer 4

s4-1

Income tax is payable by each individual and company, and by some other entities

Question 5

How to work out how much income tax you must pay

Answer 5

s4-10

income tax = (taxable income x rate) - offsets

Question 6

Definition of a resident

Answer 6

ITAA36 s6
a person, other than a company, who resides in Australia and includes a person:

                          (i) whose domicile is in Australia, unless the Commissioner is satisfied that the person's permanent place of abode is outside Australia;
                         (ii) who has actually been in Australia, continuously or intermittently, during more than one-half of the year of income, unless the Commissioner is satisfied that the person's usual place of abode is outside Australia and that the person does not intend to take up residence in Australia

FCT v. Jenkins - Held: was not a resident for tax purposes.