Legt2751 Notes for Midsem
ITAA97 = Income Tax Assessment Act 1997
ITAA36 = Income Tax Assessment Act 1936
TAA = Taxation Administration Act 1953
GST Act = A New Tax System (Goods and Services Tax) Act 1999
FBTAA = Fringe Benefits Tax Assessment Act 1986
Week 1 - INTRODUCTION TO TAXATION & THE AUSTRALIAN TAXATION SYSTEM
Taxes - compulsory, unrequited payments to general government. Collected for the provision of social & merit goods.
1. Social goods - Joint consumption (use by 1 doesn’t reduce others) & Non-excludable (can’t effectively exclude anyone from access to good). E.g. fresh air, street lighting, knowledge, open source software.
2. Merit goods - provided on the basis of need and not ability to pay & positive externalities to society as a whole. E.g. health care, food stamps, education.
3. Social Engineering – Reason govt. may tax. – attempt to change a person’s behaviour. E.g. higher taxes on ‘alcopops’ / tobacco / carbon tax. This may not always work & may have negative consequences.
4. Market Imperfections – tax aim to correct the allocation of free market resources.
Tax Policy Objectives: 1. Simplicity – low compliance costs and certainty of who needs to pay what. 2. Equity ie fairness - Vertical equity: those in different positions should be treated (taxed) differently i.e. progressive taxation & horizontal equity: those in similar positions should be taxed in the same way i.e. different types of ‘income’ still. 3. Neutrality – decisions should not be influenced by tax e.g. business decisions.
History of Taxes:
England - Modern tax system introduced in 1842, “Schedular system” – different classes of income taxed under different rules.
Australia - Income tax introduced in 1915 (due to WW1): Income Tax Act 1915 (Cth) * Did not follow English tax legislation, but did not entirely reject it * No notion of “schedules” – all income taxed under same Act and at same rate
Constitutional Background: Taxation is a “concurrent power” (State and
ITAA36 = Income Tax Assessment Act 1936
TAA = Taxation Administration Act 1953
GST Act = A New Tax System (Goods and Services Tax) Act 1999
FBTAA = Fringe Benefits Tax Assessment Act 1986
Week 1 - INTRODUCTION TO TAXATION & THE AUSTRALIAN TAXATION SYSTEM
Taxes - compulsory, unrequited payments to general government. Collected for the provision of social & merit goods.
1. Social goods - Joint consumption (use by 1 doesn’t reduce others) & Non-excludable (can’t effectively exclude anyone from access to good). E.g. fresh air, street lighting, knowledge, open source software.
2. Merit goods - provided on the basis of need and not ability to pay & positive externalities to society as a whole. E.g. health care, food stamps, education.
3. Social Engineering – Reason govt. may tax. – attempt to change a person’s behaviour. E.g. higher taxes on ‘alcopops’ / tobacco / carbon tax. This may not always work & may have negative consequences.
4. Market Imperfections – tax aim to correct the allocation of free market resources.
Tax Policy Objectives: 1. Simplicity – low compliance costs and certainty of who needs to pay what. 2. Equity ie fairness - Vertical equity: those in different positions should be treated (taxed) differently i.e. progressive taxation & horizontal equity: those in similar positions should be taxed in the same way i.e. different types of ‘income’ still. 3. Neutrality – decisions should not be influenced by tax e.g. business decisions.
History of Taxes:
England - Modern tax system introduced in 1842, “Schedular system” – different classes of income taxed under different rules.
Australia - Income tax introduced in 1915 (due to WW1): Income Tax Act 1915 (Cth) * Did not follow English tax legislation, but did not entirely reject it * No notion of “schedules” – all income taxed under same Act and at same rate
Constitutional Background: Taxation is a “concurrent power” (State and