Tax Law
xTopics in this lecture
• Income
– Assessable Income
Topic 2: Income
– Ordinary Income
– Statutory Income
Australian Tax Law BFA714
– Exempt Income
BFA714_10
What is income?
2
Key Legislative Provisions
ITAA97
• Economist View
– Division 6:
•
•
•
•
•
– Traditional economic view of income is that it is a
‘gain’
• Recognises both realised and unrealised gains as income
s 6-5 Ordinary income s 6-10 Statutory income s 6-15 Not assessable income s 6-20 Exempt income s 6-23 Non-assessable non-exempt income
– Other Relevant Divisions:
•
•
•
•
• Tax View
• Only recognises realised gains as income
BFA714_10
3
Division 10
Division 11
Division 15
Division 59
Assessable income list
Exempt income list
Some items of assessable income
Non-assessable non-exempt income
BFA714_10
4
Need for assessable income
Guide to Division 6 – section 6-1
s 4 –15 ITAA97 How to work out your taxable income: Taxable Income = Assessable Income – Deductions
Hence it is the concept of assessable income and deductions that determines taxable income.
Assessable income: Division 6
Deductions: Division 8
BFA714_10
5
Lecture 1 - Page 1
BFA714_10
6
(1) Ordinary income sec 6-5(1)
What is assessable income?
• s 6-5(2) ITAA97 ‘If you are an Australian resident, your assessable income includes the ordinary income you derive directly or indirectly from all sources, whether in or out of
Australia during the income year’
The following analysis may be applied in determining whether an amount is included in assessable income:
(1) Is the amount ordinary income?
(2) Is the amount statutory income?
(3) Are the residency and source of income requirements satisfied?
(4) Is the amount exempt income?
• No specific guidance in legislation as to what is meant by ‘income according to ordinary concepts’ or ‘derived’
Courts
BFA714_10
7
BFA714_10
Tax period
8
Timing of
• Income
– Assessable Income
Topic 2: Income
– Ordinary Income
– Statutory Income
Australian Tax Law BFA714
– Exempt Income
BFA714_10
What is income?
2
Key Legislative Provisions
ITAA97
• Economist View
– Division 6:
•
•
•
•
•
– Traditional economic view of income is that it is a
‘gain’
• Recognises both realised and unrealised gains as income
s 6-5 Ordinary income s 6-10 Statutory income s 6-15 Not assessable income s 6-20 Exempt income s 6-23 Non-assessable non-exempt income
– Other Relevant Divisions:
•
•
•
•
• Tax View
• Only recognises realised gains as income
BFA714_10
3
Division 10
Division 11
Division 15
Division 59
Assessable income list
Exempt income list
Some items of assessable income
Non-assessable non-exempt income
BFA714_10
4
Need for assessable income
Guide to Division 6 – section 6-1
s 4 –15 ITAA97 How to work out your taxable income: Taxable Income = Assessable Income – Deductions
Hence it is the concept of assessable income and deductions that determines taxable income.
Assessable income: Division 6
Deductions: Division 8
BFA714_10
5
Lecture 1 - Page 1
BFA714_10
6
(1) Ordinary income sec 6-5(1)
What is assessable income?
• s 6-5(2) ITAA97 ‘If you are an Australian resident, your assessable income includes the ordinary income you derive directly or indirectly from all sources, whether in or out of
Australia during the income year’
The following analysis may be applied in determining whether an amount is included in assessable income:
(1) Is the amount ordinary income?
(2) Is the amount statutory income?
(3) Are the residency and source of income requirements satisfied?
(4) Is the amount exempt income?
• No specific guidance in legislation as to what is meant by ‘income according to ordinary concepts’ or ‘derived’
Courts
BFA714_10
7
BFA714_10
Tax period
8
Timing of