HI5028 - Lecture 1 2013

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Coverage of the ITAA36

ITAA36 is divided into Parts: Part I – Preliminary Part II – Administration Part III – Liability to taxation Part IV – Returns and assessments Part IVA – Schemes to reduce income tax Part VA – Tax File Numbers Part VI – Collection and recovery of tax Part VIIB – Medicare levy and surcharge Part VIII – Miscellaneous Part X – Controlled foreign companies Schedules – Special matters (eg trust losses)
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GST legislation (cont)

GST is imposed at the rate of 10% by: A New Tax System (Goods and Services Tax Imposition – General) Act 1999 A New Tax System (Goods and Services Tax Imposition – Customs) Act 1999 A New Tax System (Goods and Services Tax Imposition – Excise) Act 1999
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Traditional and modern approaches to interpretation

Traditional approach to interpreting legislation was to use a strict literal approach (eg Westraders) Modern approach to interpreting legislation is to use an approach that promotes the purpose or object of the statute “Purposive approach” is based on s 15AA Acts Interpretation Act and requires the courts to have regard to the broader “context” of the legislation from the outset and not just when an ambiguity arises
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Legislative framework of the Australian tax system; and Australian taxes.
Income tax legislation



ITAA36 and ITAA97 establish the income “tax base” ITAA36 and ITAA97 must be read in conjunction with other Acts (eg the International Tax Agreements Act 1953) The ITAA36 and ITAA97 operate alongside the Income Tax Regulations 1936 and the Income Tax Assessment Regulations 1997 Income Tax Act 1986 imposes income tax on a taxpayer’s taxable income Income Tax Rates Act 1986 sets out rates of tax for different taxpayers
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Common law rules of statutory interpretation

Literal rule requires words of legislation to be interpreted according to their “natural” and “ordinary” meaning Golden rule requires legislation to be interpreted in a commonsense way that avoids absurd, irrational, capricious or unjust outcomes Mischief rule requires legislation to be interpreted in a way that addresses the mischief, harm or defect that the legislature intended to remedy
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Subsequent reforms

TLIP has not been completed TLIP was superseded by ANTS reforms Remaining ITAA36 provisions will gradually be shifted into the ITAA97 Single Assessment Act is still some time away
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Legislative rules of statutory interpretation

Acts Interpretation Act 1901 rules: Acts must be read subject to the Constitution (s 15A) Construction that promotes the purpose or object of the Act is preferred (s 15AA) Extrinsic material may be used to assist in confirming meaning (s 15AB) Changes of style (s 15AC) Relevance of examples (s 15AD)
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Literal approach

“It is for the Parliament to specify … with unambiguous clarity, the circumstances which will attract an obligation on the part of the citizen to pay tax. The function of the Court is to interpret and apply the language in which the Parliament has specified those circumstances. The Court is to do so by determining the meaning of the words employed by the Parliament according to the intention of the Parliament which is discoverable from the language used by the Parliament. It is not for the Court to mould or to attempt to mould the language of the statute so as to produce some result which it might be thought the Parliament may have intended to achieve, though not expressed in the actual language employed.” (Westraders)
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Tax administration legislation

Tax Administration Act 1953 deals with a range of tax administration matters, such as: Appointment of Commissioner of Taxation General interest charge Running balance accounts Tax offences Objections, reviews and appeals Pay As You Go collection system Recovery of tax Tax rulings Record-keeping
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FBT legislation

Fringe Benefits Tax Assessment Act 1986 (FBTAA) determines fringe benefit taxable amount Fringe Benefits Tax Act 1986 imposes FBT on employers at 46.5% Fringe Benefits Tax (Application to the Commonwealth) Act 1986 ensures FBT applies to Commonwealth Departments in the same way as other employers
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Holmes Institute: MBA Program