Australian Tax Law Sources

Primary Sources of Australian Tax Law

• Legislation is the main source of tax law, created by the government.
• Case law interprets legislation through court decisions, influencing its application.
• Australian Taxation Office (ATO) rulings offer the ATO's perspective on tax laws in specific scenarios.

Taxpayer Identification under ITAA97

• Section 960-100 of the ITAA97 identifies any entity liable to pay tax as a taxpayer.
• This includes individuals, companies, partnerships, trusts, and superannuation funds.

Tax File Number (TFN) vs Australian Business Number (ABN)

• A TFN is a unique identifier for individuals and entities for tax purposes, essential for income tax returns.
• An ABN is assigned to businesses and entities engaged in an enterprise, necessary for business transactions like invoicing and claiming GST credits.

Self-Assessment in the Australian Tax System

• Taxpayers must calculate their taxable income and tax amount owed, under a self-assessment system.
• The ATO reviews tax returns and issues assessment notices, placing the burden of accuracy on taxpayers to avoid penalties for errors.

Income Tax Formula under ITAA97

• The formula for calculating income tax is: Income Tax = (Taxable Income × Rate) − Tax Offsets.
• It involves determining taxable income, applying the correct tax rate, and subtracting applicable tax offsets.

Jurisdiction to Tax: Residents vs Non-Residents

• Residents are taxed on worldwide income, including both Australian and foreign-sourced income.
• Non-residents are taxed solely on income sourced from Australia, determined by specific residency criteria in tax law.

Medicare Levy Overview

• The Medicare levy is a tax on taxable income, typically set at 2%, to fund Australia's public health system.
• Low-income earners may be exempt or qualify for reduced levy amounts based on income thresholds.

Medicare Levy Surcharge Purpose

• The Medicare levy surcharge can be up to 1.5% for higher-income earners without private hospital health insurance.
• Its goal is to motivate individuals to obtain private insurance, alleviating pressure on the public Medicare system.

Small Business Entity (SBE) Concessions Eligibility

• Entities must be engaged in business activities and have an aggregated turnover below $10 million to qualify for SBE concessions.
• These concessions aim to decrease compliance costs for small businesses.

Income from the Sharing Economy

• Income derived from the sharing economy must be reported as taxable income.
• Taxpayers operating in this sector hold the same obligations as traditional income earners, including registration and payment of taxes.

This quiz explores the primary sources of Australian tax law, including legislation, case law, and rulings from the Australian Taxation Office (ATO). Understand how these sources interact and their significance in the tax system. Test your knowledge of the frameworks that define tax obligations in Australia.