Taxation

Question 1

Where is tax sourced from?

Answer 1

Income, goods and services, property and wealth

Question 2

Purpose of tax

Answer 2

Raise revenue, redistribution of income from wealthy to poor, resource allocation, regulating business cycle fluctuations

Question 3

Impact

Answer 3

Where the tax is applied

Question 4

Incidence

Answer 4

Where the burden falls/who pays

Question 5

PAYG

Answer 5

Pay as you go

Question 6

Direct taxation

Answer 6

Collected from income, impact/incidence on same person

Question 7

Indirect taxation

Answer 7

Collected from expenditure, seller passes tax price to consumers

Question 8

Progressive tax

Answer 8

Claims higher proportion of income as it rises

Question 9

Regressive tax

Answer 9

Decreasing proportion of income as it rises

Question 10

Proportional tax

Answer 10

Claimed at equal rate regardless of income

Question 11

Principles of taxation

Answer 11

Fair, simple, efficient

Question 12

Canons of taxation

Answer 12

Equity, economy, certainty, convenience

Question 13

Horizontal equity

Answer 13

Taxpayers earning same should pay same

Question 14

Why achieve principles of taxation?

Answer 14

Improve economic wellbeing

Question 15

Vertical equity

Answer 15

Taxpayers with greater capacity to pay tax should pay higher amounts

Question 16

Why should taxation systems be simple?

Answer 16

Participants should understand what and how much taxes they pay, convenient as possible

Question 17

How are taxation systems made to be efficient?

Answer 17

Benefits must outweigh costs, same levels of tax for industries/products

Question 18

FBT

Answer 18

Highest marginal tax rate on non-cash benefits with salary package

Question 19

Incidence and impact of company tax

Answer 19

Impact on company, incidence on consumers

Question 20

Wholesales sales tax

Answer 20

Rate of tax based on luxury of item, 1930s-2000

Question 21

GST

Answer 21

10% tax on non-essentials

Question 22

Excise duties

Answer 22

Raise large revenue without affecting consumption patterns , inelastic products

Question 23

Customs duty

Answer 23

Protects Australian producers from overseas competition

Question 24

CGT

Answer 24

Levied on profits from sold assets held for 12+ months, adjusted for inflation

Question 25

What does CGT apply to?

Answer 25

Shares, investment properties, business goodwill, items bought with intention to resell

Question 26

What does CGT NOT apply to?

Answer 26

Personal items (houses, cars, boats)

Question 27

Stamp duty

Answer 27

Levied on ransfer of ownership of property/assets

Question 28

Dividend imputation

Answer 28

1987, prevents company profits from being taxed twice

Question 29

Which products tend to have excise duties?

Answer 29

Petrol, cigarettes, alcohol

Question 30

Why are regressive taxes “unfair”?

Answer 30

Uses higher proportion of low earner’s income

Question 31

Marginal income tax rate

Answer 31

The cents per dollar rate of tax paid