CA Program Core 4: Tax (Australia) key terms

The total of ordinary income and statutory income earned by a taxpayer in an income year, excluding amounts that legislation specifically makes non-assessable or exempt.

Income recognised by general concepts of income rather than a specific statutory provision, typically including wages, business receipts and returns from property, assessed on a realised and recurring basis.

Amounts made assessable by a specific provision of the tax law rather than by ordinary concepts, such as net capital gains, dividends with franking credits and certain allowances.

Income that legislation declares not assessable, so it is excluded from the tax base; it can still affect the calculation of offsets, HELP repayments and other thresholds.

Amounts excluded from assessable income by a provision that also prevents them being treated as exempt income, so they generally do not affect offset or repayment thresholds.

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 statutory exclusions.

The two opening tests of the general deduction provision: an outgoing incurred in gaining or producing assessable income, or necessarily incurred in carrying on a business for that purpose.

The statutory categories that deny a deduction even where a positive limb is satisfied, covering capital, private or domestic outgoings, outgoings incurred in producing exempt income, and amounts specifically disallowed.

Describes expenditure that creates or enhances an enduring asset or advantage, or is incurred in establishing a business structure, and is therefore not deductible under the general provision.

An asset with a limited effective life that declines in value over time, for which the holder claims decline-in-value deductions under the uniform capital allowance rules.

Anything produced, manufactured or acquired that is held for manufacture, sale or exchange in the ordinary course of business, valued at year end using permitted valuation methods.

The amount included in assessable income after applying capital losses, the small business concessions where relevant, and the discount percentage to capital gains remaining in the year.

The excess of the capital proceeds from a CGT event over the cost base of the CGT asset, calculated at the time the event happens.

The five-element amount used to measure a capital gain, covering acquisition costs, incidental costs, ownership costs, capital expenditure to preserve or enhance the asset, and certain other costs.

The cost base excluding the third element of ownership costs, used to measure a capital loss and to determine non-assessable payments received in respect of a CGT asset.

A defined occurrence, such as disposal or loss of an asset, that triggers the capital gains tax rules and requires the taxpayer to work out a gain or loss.

A concession allowing individuals and trusts to reduce a capital gain on an asset held at least twelve months by a fixed percentage, with a smaller percentage for complying superannuation funds.

The excess of the reduced cost base over the capital proceeds for a CGT event; it cannot offset ordinary income and is carried forward to reduce future capital gains.

The statutory rate applied to a company's taxable income, with a lower rate available to base rate entities that meet the aggregated turnover and passive income tests.

A credit attached to a dividend representing company tax already paid, which resident shareholders include in assessable income and then claim as an offset against their own tax.

The mechanism that allocates company tax paid to shareholders through franking credits, preventing distributed profits from being taxed twice in the hands of resident shareholders.

A running record of franking credits and debits maintained by a corporate tax entity, which determines the maximum franking credits that can be attached to distributions.

A single-entity regime treating a wholly owned corporate group as one taxpayer for income tax, with subsidiary membership interests disregarded and losses and assets brought into the group.

A broad-based indirect tax of a fixed percentage on taxable supplies and taxable importations, with registered entities generally entitled to credits for tax included in their business inputs.

A supply made for consideration, in the course or furtherance of an enterprise, connected with the indirect tax zone, by an entity registered or required to be registered for GST.

An entitlement to credit for GST included in the price of acquisitions or importations made for use in carrying on an enterprise, claimed through the business activity statement.

A supply that is taxed at a zero rate, so no GST is charged but the supplier may still claim input tax credits, commonly covering basic food, health and education.

A benefit provided to an employee or associate in respect of employment, other than salary or wages, which creates a liability for the employer under the fringe benefits tax regime.

The grossed-up value of fringe benefits provided in an FBT year, calculated using type 1 or type 2 gross-up factors to reflect the GST treatment of the benefit.

A tax payable by employers on the taxable amount of fringe benefits provided to employees, levied for an FBT year ending 31 March and generally deductible to the employer.

An arrangement where an employee agrees to forgo part of future salary in exchange for another benefit, which can reduce income tax while potentially creating fringe benefits tax or contribution cap issues.

A superannuation contribution taxed at a reduced rate within the fund, including employer contributions and personal contributions claimed as a tax deduction, subject to an annual cap.

A superannuation contribution made from after-tax money that is not taxed on entry to the fund, limited by an annual cap and a total superannuation balance test.

The minimum age at which a member may access preserved superannuation benefits, provided a condition of release such as retirement is also satisfied.

The place or activity from which income is derived, used to determine whether Australia may tax it and to apply the rules for foreign residents and double tax agreements.

The statutory tests determining whether an individual or company is an Australian resident for tax purposes, including domicile, permanent place of abode and 183-day tests.

Tax collected at source by a payer or intermediary on certain payments, such as interest, dividends and royalties paid to foreign residents, or on payments to overseas suppliers.

A bilateral treaty allocating taxing rights between countries and providing relief from double taxation, typically through credit or exemption mechanisms and non-discrimination rules.

A provision allowing the Commissioner to cancel a tax benefit obtained from a scheme, where an objective assessment of the arrangement shows a dominant purpose of obtaining that benefit.

An amount not included in assessable income, or a deduction or offset allowed, that would reasonably be expected to arise if the scheme had not been entered into.

The principal statutory anti-avoidance provision in the income tax law, empowering the Commissioner to make determinations cancelling tax benefits from schemes entered into with the requisite purpose.

A public statement by the revenue authority setting out what taxpayers can expect in their dealings with it and what the authority expects from taxpayers.

The system where taxpayers lodge returns and the Commissioner accepts the stated liability without detailed checking, relying on subsequent review, audit and amendment powers.

Arranging affairs lawfully to minimise tax, ideally before a transaction occurs, while respecting anti-avoidance rules, timing rules and the commercial substance of the arrangement.