CA ANZ Advanced Tax (Australia) flashcards

33 cards. Read the term and the definition here. The deck at the top of this page is optional.

Ordinary income

Income according to ordinary concepts under s6-5 ITAA 1997, determined by characteristics such as regularity, periodicity, reliance on it, and connection with income-producing activity.

General deduction

A loss or outgoing is deductible under s8-1 ITAA 1997 to the extent it is incurred in gaining or producing assessable income, provided it is not capital, private or domestic.

Trading stock valuation

Under s70-45 ITAA 1997, closing stock may be valued at cost, market selling value, or replacement value, with the choice available each year for each item.

CGT event A1

The disposal of a CGT asset under s104-10 ITAA 1997; the capital gain is capital proceeds less cost base, and a loss arises where reduced cost base exceeds proceeds.

Cost base elements

Section 110-25 ITAA 1997 sets five elements: acquisition costs, incidental costs, non-deductible ownership costs, enhancement costs, and costs to preserve title.

CGT discount

Under Div 115 ITAA 1997, individuals and trusts receive a 50% discount and complying super funds 33⅓%, provided the asset was held at least 12 months.

Capital works deduction

Division 43 ITAA 1997 allows a 2.5% or 4% deduction on construction costs of eligible buildings and structural improvements used to produce assessable income.

Balancing adjustment

Under s40-285 ITAA 1997, when a depreciating asset is terminated, the termination value less adjustable value produces an assessable gain or deductible loss.

Partnership taxation

A partnership is not a taxable entity; under s90 ITAA 1936 each partner includes their share of net partnership income in their own assessable income for the year.

Trust present entitlement

Under s97 ITAA 1936, a beneficiary presently entitled to trust income is assessed on their share; the trustee is assessed under s98 or s99A otherwise.

Trust streaming

Division 6E ITAA 1936 permits capital gains and franked distributions to be streamed to specific beneficiaries if recorded in the trust records by 30 June.

Base rate entity

A company with aggregated turnover below $50 million and no more than 80% passive income, taxed at 25% rather than the standard 30% company rate.

Franking credits

Imputation credits attached to franked distributions under Div 207 ITAA 1997 allow resident shareholders to gross up dividends and claim a tax offset.

Division 7A

Payments, loans and forgiven debts from private companies to shareholders or associates are treated as dividends unless repaid or placed on complying loan terms.

GST taxable supply

Under s9-5 GST Act, a taxable supply is made for consideration in carrying on an enterprise, is connected with the indirect tax zone, and is not GST-free or input taxed.

Input tax credit

A credit under Div 11 GST Act for the GST paid on a creditable acquisition made for a creditable purpose, claimed through the business activity statement.

GST-free supplies

Division 38 GST Act lists supplies such as fresh food, health services, education and exports that attract no GST but still allow input tax credits.

Fringe benefits tax

A tax on employers for non-cash benefits provided to employees, calculated using gross-up rates of 2.0802 for Type 1 and 1.8868 for Type 2 benefits.

Individual residence test

Under s6(1) ITAA 1936, an individual is a resident if they reside in Australia, or meet the 183-day, domicile, or Commonwealth superannuation tests.

Withholding tax

Tax withheld on Australian-source dividends, interest and royalties paid to non-residents at statutory rates, reduced by applicable double tax agreements.

Transfer pricing

Division 815 ITAA 1997 requires cross-border dealings between related parties to be priced on an arm's-length basis, with self-assessment and documentation obligations.

Thin capitalisation

Division 820 ITAA 1997 limits debt deductions of foreign-controlled entities where the debt-to-equity ratio exceeds 1.5:1 or the arm's-length test is failed.

Controlled foreign company

Part X ITAA 1936 attributes tainted income of a foreign company controlled by Australian residents to those residents where the control and income tests are met.

Concessional contributions cap

The annual limit on contributions taxed at 15% in the fund; the cap is $30,000 for 2024-25, with Division 293 imposing additional tax on high earners.

Transfer balance cap

The lifetime limit on amounts transferred into retirement phase, $1.9 million for 2024-25, with excess transfer balance tax on amounts above the cap.

Superannuation guarantee

The mandatory employer contribution rate, 11.5% in 2024-25 rising to 12% from 1 July 2025, paid on ordinary time earnings up to the maximum contribution base.

Sole purpose test

Section 62 SIS Act 1993 requires a superannuation fund to be maintained solely for providing benefits on retirement, death, disability or termination of employment.

Part IVA

The general anti-avoidance provision in ITAA 1936 allowing the Commissioner to cancel a tax benefit from a scheme entered into with a dominant purpose of obtaining it.

Personal services income

Divisions 85-87 ITAA 1997 attribute income from personal services to the individual unless the results, unrelated clients, employment or business premises test is met.

Record keeping

Section 262A ITAA 1936 requires records to be kept for five years after the relevant act, with longer periods for CGT assets and substantiation of expenses.

Voluntary disclosure

A taxpayer's disclosure of a shortfall before audit may reduce penalties by up to 80% and, in some cases, avoid prosecution for the shortfall.

TPB Code of Conduct

Section 30-10 TPB Act 2009 sets five principles: honesty and integrity, independence, confidentiality, competence, and compliance with the law for registered agents.

Private ruling

A written ruling under Div 359 Sch 1 TAA 1953 that binds the Commissioner in relation to a specific arrangement, protecting the taxpayer who relies on it in good faith.