ACCG8124: Taxation Law Principles from High Court - Law Assignment Help

Assignment Task:

Task:

What is a tax?

Principles from High Court in MacCormick v FC of T (1983-84) 158 CLR 62 – a payment is a tax where:
1. it is a compulsory payment
2. the money is raised for government purposes
3. it is not a payment for services
4. it is not arbitrary
5. it is not a penalty, and
5. it is contestable – can be challenged

Taxes are imposed at three levels in Australia: Commonwealth, State and Local

Types of taxes

1. Income taxes imposed by the Commonwealth on income -- paid by individuals, companies etc
2. Property taxes – death duties (no longer in Australia)
3. Taxes on consumption – goods and services tax (GST) and customs duties by the Commonwealth, stamp duties by the States and Territories
4. Taxes on labour and land -- Pay-roll tax on wages and land tax on land (unless used for residence) – imposed by the States and Territories
5. Taxes imposed by local government, eg, rates on home owners

Constitutional aspects of taxation

Commonwealth Government can only exercise the powers that are granted to it under the Constitution – the primary taxation power is set out in s 51(ii) which provides that:
“The Commonwealth Parliament shall have power to make laws with respect to :
(ii) taxation; but not so as to discriminate between states and parts of states.”

Some other provisions of the Constitution relevant to the taxing power:
s 90 -- duties of customs and excise – on goods imported into Australia
s 96 -- power to grant assistance to any State
s 109 -- Commonwealth law prevails over inconsistent state law, eg if they make a law on the same matter and there is conflict between the two laws
s 114 -- Commonwealth and the States cannot tax each other’s property – so the Commonwealth cannot impose tax on the income of a State bank Commonwealth power to impose income tax is not exclusive, but the States no longer impose income tax

Sources of Australian income tax law

• Legislation
Statutes (legislation) passed by the Federal Parliament
 

Federal tax legislation includes:
Income Tax Assessment Act 1997 (ITAA97) – the most important tax legislation
Income Tax Assessment Act 1936 (ITAA36)
Fringe Benefits Tax Assessment Act 1986
Tax Administration Act 1953
A New Tax System (Goods and Services Tax) Act 1999

• Case law
Interpretation of tax legislation by the courts
• Australian Taxation Office practice
Administration of the tax law by the Australian Taxation Office (ATO)

Case Law

Role of the courts is to: (1) interpret tax legislation which may be unclear and ambiguous, and (2) fill in the gaps where the legislation doesn’t give the answer.
Doctrine of precedent requires a lower court to follow a legal principle established in a higher court.
Tax cases usually have a name such as: FC of T v Smith – “FC of T” stands for Federal Commissioner of Taxation and “Smith” is the taxpayer.

Hierarchy of the courts for tax cases is generally:
1. Administrative Appeals Tribunal (AAT) at the bottom,
2. then Federal Court (single judge),
3. then Full Federal Court (three judges),
4. then High Court (but only if the High Court grants leave for the case to be heard)

Administrative aspects of taxation

• Australian Taxation Office (ATO), headed by the Commissioner of Taxation , administers the tax system

• Annual income tax return must generally be lodged by 31 October each year
• Registered tax agents lodge returns based on a lodgement program

• Different tax returns for individuals, companies, partnerships, trusts, superannuation funds etc.

• Under the self-assessment system, the ATO relies on information provided in tax returns to make an assessment and penalties are imposed for false statements

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