Level: Professional
Cost: $199 members $320 non-members
Estimated learning duration: 10 hours
Assessment duration: 2.5 hours
Assessment: Part 1: 20 multiple choice questions 75% pass mark
Part 2: 3 scenarios with 3-4 multiple choice questions per scenario 75% pass mark
Assumed knowledge: There is no tax technical knowledge assumed for this unit.
In this unit you will learn about the different ways in which receipts of amounts of income may be assessed to tax or not, and the legislative processes which govern this. You will also learn about the timing of when receipts may be taxed, and the ways in which different tax rates are applied to taxable income.
In this section you will learn about how income tax came to be one of the major sources of government revenues in most modern tax systems and how it developed as Australia developed as a nation. You will be introduced to the main pieces of legislation and other key sources of law that exist in Australia and how these operate to determine how income is determined for tax purposes and taxed in Australia.
As you will learn in this section, what is income is a question which has been considered by the courts in many jurisdictions for many years. The concepts that are relevant to determining what constitutes “income according to ordinary concepts” are examined in this section with reference to some of the key court decisions along the way. As many of your clients may be operating a business, aspects of income from businesses (including one-off transactions), and what in fact constitutes a business (as opposed to a hobby for example) are also explored here as well as the other key sources of ordinary income, income from personal exertion and income from property.
Once it has been established that you have a source of income, it is important that the income is assessed to tax in the correct tax period. You will learn about the rules that are applied to determine when income is derived for tax purposes and understand the key judicial authorities in this area. These rules differ depending on the type of income (or entity) that is being considered and these differences are explored in this section also. As well as understanding the position for individual and company taxpayers you will also be introduced to the way that different business entities (partnerships, trusts and superannuation funds) are considered when it comes to the derivation of income.
As ordinary income is conceptualised from first principles, there are many additional features of the income tax system which create assessable amounts outside of these concepts. These are amounts which are brought to tax by specific statutory provisions, if these amounts are ordinary income, yet subject to assessment by a specific provision, these amounts remain as ordinary income. If an amount is not ordinary income but assessed by a specific provision, this is statutory income. You will be introduced to the range of items that are assessed as statutory income and explore two key ones in overview in this section, franking credits arising under the imputation system and net capital gains. This section also introduces you to the concept of an assessable recoupment.
In this section, you will be introduced to the range of provisions that make income, which is either ordinary income or statutory income, not subject to income tax. You will learn about exempt income and non-assessable non-exempt or NANE income. You will learn about examples of both types of income and the consequences resulting from their characterisation as such.
Across the world different jurisdictions exercise a right to raise taxes from a whole range of business entities. The basis on which this is done in Australia (and in many other countries) is explored in this section. You will be introduced to the concepts of “residence” and “source” as well as gaining a basic understanding of the implications on taxpayers of having a status as resident, non-resident and for individuals, temporary resident in terms of their income tax position. Cross-border taxation is very complex, this section will provide you with a grasp of the core concepts and consequences in general terms.
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