ITAA Research Paper
Topic Three
THE STRUCTURE OF THE ITAA AND THE INCOME CONCEPT
Brief Outline Of This Topic
jurisdictional aspects of the ITAA assessable income taxable income exempt income ordinary income statutory income tax offset marginal rate average rate
Detailed Outline Of This Topic
3.1 Jurisdictional Aspects Of The ITAA
Legislation:
ITAA97 s6-5; s6-10
Text: UTL 2.31 to 2.49
Income tax treatment of residents
Income tax treatment of foreign residents
CGT treatment of foreign residents
2.31
ITAA97 s6-5 and s6-10 provide common jurisdiction limits to Aus claim to tax. Aus residents are liable to tax on worldwide income, non- residents’ liability is limited to Aus source income.
2.32
A non-resident’s exposure …show more content…
ITAA36 operates concurrently with the ITAA97
s4-15(1) is the taxable income equation: taxable income = assessable income – deductions.
Assessable income is defined in division 6. Assessable income is made up of ordinary income and statutory income (ITAAS97 s6-1).
An important feature of a credit/rebate/offset is that it reduces one’s tax, as opposed to a deduction, which reduces one’s taxable income. One of the best known tax credits is the imputation credit accompanying a franked dividend paid by a company to a …show more content…
Australia resident is subject to assessment on all ordinary income, irrespective of its source.
Foreign resident is liable only in respect of Australian source income.
Statutory Income
All other amounts that are not ordinary income.
Exempt Income
6-15 What is not assessable income: if an amount if not ordinary income, and is not statutory income, it is not assessable income (so you don’t have to pay income tax on it)
6-20 An amount of ordinary income or statutory income is exempt income if it is made exempt from income tax by a provision of this Act or another Commonwealth law.
Scott v CT (NSW)
He was dismissed and was paid compensation. This amount represented what he would have received had his services been used.
Held: No part was income under the NSW Income Tax ACT
Tennant v Smith
Mr Tennant was allowed to live in a rent-free premises.
Held: The amount was not liable to tax because income must be convertible into money.
FCT v Cooke & Sherden further supports this decision as two taxpayers were awarded holiday and it was held that it did not represent
THE STRUCTURE OF THE ITAA AND THE INCOME CONCEPT
Brief Outline Of This Topic
jurisdictional aspects of the ITAA assessable income taxable income exempt income ordinary income statutory income tax offset marginal rate average rate
Detailed Outline Of This Topic
3.1 Jurisdictional Aspects Of The ITAA
Legislation:
ITAA97 s6-5; s6-10
Text: UTL 2.31 to 2.49
Income tax treatment of residents
Income tax treatment of foreign residents
CGT treatment of foreign residents
2.31
ITAA97 s6-5 and s6-10 provide common jurisdiction limits to Aus claim to tax. Aus residents are liable to tax on worldwide income, non- residents’ liability is limited to Aus source income.
2.32
A non-resident’s exposure …show more content…
ITAA36 operates concurrently with the ITAA97
s4-15(1) is the taxable income equation: taxable income = assessable income – deductions.
Assessable income is defined in division 6. Assessable income is made up of ordinary income and statutory income (ITAAS97 s6-1).
An important feature of a credit/rebate/offset is that it reduces one’s tax, as opposed to a deduction, which reduces one’s taxable income. One of the best known tax credits is the imputation credit accompanying a franked dividend paid by a company to a …show more content…
Australia resident is subject to assessment on all ordinary income, irrespective of its source.
Foreign resident is liable only in respect of Australian source income.
Statutory Income
All other amounts that are not ordinary income.
Exempt Income
6-15 What is not assessable income: if an amount if not ordinary income, and is not statutory income, it is not assessable income (so you don’t have to pay income tax on it)
6-20 An amount of ordinary income or statutory income is exempt income if it is made exempt from income tax by a provision of this Act or another Commonwealth law.
Scott v CT (NSW)
He was dismissed and was paid compensation. This amount represented what he would have received had his services been used.
Held: No part was income under the NSW Income Tax ACT
Tennant v Smith
Mr Tennant was allowed to live in a rent-free premises.
Held: The amount was not liable to tax because income must be convertible into money.
FCT v Cooke & Sherden further supports this decision as two taxpayers were awarded holiday and it was held that it did not represent