CA ANZ Advanced Tax (Australia) key terms

All income according to ordinary concepts plus statutory income included under the tax law, before deductions. It forms the starting point for calculating taxable income for all taxpayers.

Income recognised by case law as income according to ordinary concepts, typically exhibiting characteristics such as periodicity, regularity, and dependence on labour or capital. It is distinguished from capital receipts.

Amounts included in assessable income by specific legislative provisions rather than ordinary concepts, such as capital gains, dividends, and certain allowances. It operates alongside ordinary income.

A receipt or payment relating to the structure or capital assets of a business rather than its income-producing operations. Such amounts are usually excluded from ordinary income and dealt with under capital gains rules.

A loss or outgoing is deductible to the extent it is incurred in gaining or producing assessable income, or necessarily incurred in carrying on a business, subject to specific exclusions.

A deduction allowed only because a particular provision expressly permits it, such as deductions for repairs, gifts, or tax-related expenses. It applies despite the general deduction provision.

Anything produced, manufactured, acquired, or purchased for manufacture, sale, or exchange in the ordinary course of business. Special valuation and disposal rules apply to it.

A situation where deductions attributable to an income-producing investment, such as interest and expenses on a rental property, exceed the income it generates, producing a net loss that may reduce other taxable income.

The profit realised on disposal of a CGT asset, calculated as capital proceeds less cost base. It may be included in assessable income after applying netting and discount rules.

A defined occurrence, such as a disposal or creation of an asset, that may give rise to a capital gain or capital loss under the capital gains tax provisions.

The amount used to measure a capital gain, comprising acquisition costs, incidental costs, ownership costs, and certain capital expenditure, with adjustments for improvements and prior losses.

A concession allowing eligible individuals and trusts to reduce a capital gain by a fixed percentage when the asset has been held for the required minimum period, commonly twelve months.

The annual deduction claimed for the decline in value of a depreciating asset used to produce assessable income, calculated under either the diminishing value or prime cost method.

Assessable income less allowable deductions for the income year. Tax payable is then calculated by applying marginal rates to this amount, with offsets applied afterwards.

The rate applying to the next dollar of taxable income within a progressive scale. It differs from the average rate, which reflects total tax divided by total taxable income.

A credit that directly reduces tax payable rather than taxable income, such as the private health insurance rebate or franking credits. Refundable offsets can produce a refund.

An association of persons carrying on business in common with a view to profit. It is not a separate taxpayer; net partnership income is calculated at partnership level and distributed to partners.

An arrangement where a trustee holds property for beneficiaries. The trustee may be liable to tax on trust income in certain circumstances, while beneficiaries are taxed on amounts to which they are presently entitled.

A beneficiary's presently existing right to demand payment of trust income, as distinct from a future or contingent interest. It determines who is assessed on the income.

A separate legal entity taxed on its taxable income at the company rate. Profits distributed to shareholders are generally franked, and the company is treated as a distinct taxpayer.

A credit attached to a dividend representing company tax already paid on the underlying profits. It is included in a resident shareholder's assessable income and allowed as an offset.

A broad-based indirect tax imposed at a fixed percentage on supplies of goods and services made in the course of an enterprise, with credits for tax on business inputs.

A credit claimed by a registered entity for GST included in the price of acquisitions made for carrying on its enterprise, subject to certain restrictions.

A supply made for consideration, in the course of an enterprise, connected with the indirect tax zone, by a registered entity. It is distinct from GST-free and input-taxed supplies.

A status determined by statutory tests including domicile, permanent place of abode, and physical presence. It affects whether income is taxed on a worldwide or source basis.

The place or activity from which income is derived. Non-residents are generally taxed only on Australian-sourced income, while residents are taxed on income from all sources.

An offset allowed for foreign tax paid on foreign income that is included in Australian assessable income, preventing or reducing double taxation, subject to statutory limits.

Rules requiring cross-border dealings between related entities to be priced on an arm's length basis, with adjustments where profits are shifted to lower-tax jurisdictions.

A broad provision allowing the tax authority to cancel tax benefits arising from schemes entered into with the dominant purpose of obtaining a tax advantage, with consequential adjustments.

Arranging affairs in a manner that obtains a tax advantage contrary to the purpose of the law, distinguished from permissible tax planning within the intended operation of provisions.

Legitimate structuring of affairs to minimise tax within the operation of the law, taking into account timing, entity choice, and available concessions, without an impermissible dominant purpose.

Amounts paid into a complying superannuation fund for a member. Concessional contributions are taxed in the fund, while non-concessional contributions are made from after-tax money.

The minimum age at which a member may access preserved superannuation benefits, subject to also meeting a condition of release such as retirement.

An income stream paid from superannuation savings in retirement. Earnings supporting it may receive tax concessions, and payments above certain ages are generally tax-free.

Statutory requirements for taxpayers to retain records substantiating income, deductions, and claims for specified periods, supporting returns and available on request during audits.

The system under which taxpayers determine their own tax liability in a lodged return, which is accepted at face value but remains subject to audit and amendment by the tax authority.

Meeting obligations under tax law, including registration, lodging returns, paying amounts due, and keeping records, supported by professional and ethical standards.

Duties of registered tax agents to act honestly, maintain competence, keep client information confidential, and comply with the code of professional conduct and independence requirements.