Unit 1: Australian Tax fundamentals_Part A

Key Learning Outcomes:

Areas you will be focusing on in this Taxation module

  • Based on Legislation ( Statutory Rules)
  • Laws and Principles derived from the court system (Case Law)
  1. Calculate the tax payable of a tax entity
    – Assessable Income (Ordinary Income ; Statutory Income)
    – Deductions (General deductions ; Specific deductions; deduction to an income)
    – Taxable Income (@different tax rate; e.g. Individuals, Companies, Partnership; Super; Trusts)
    – Tax offsets (Special items that will reduce the tax payable; Don’t confuse it with deductions; deduction to the tax to be paid)
    – Income tax payable
    Assessable Income – Deductions = Taxable Income

    Taxable Income × Tax Rate – Tax offsets = Income tax payable
  2. Tax Loss
    Deductions – Assessable Income – Net exempt income = Tax loss- Carried forward
  3. Assessable Income
    Residency (3 major tests)

    – resides test
    – domicile test
    – more than 183 days test
    What if it’s a company
    – a company incorporated in Australia
    – carry on business in Australia
  4.  Sources of income
     – income (a reward for service)

    – ordinary income ( income from your primary activity; not a capital nature; recurring)  
  5. Income derivation
    Cash receipts

    Accruals basis (income received in advance; Arthur Murry v.s. FCT)
    Capital receipts (Tree and Fruit) 
    Statutory Income
    Exempt Income
    NANE Income (none assessable none-exempt) 
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