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Australian School of Business

Taxation and Business Law


TABL2751 BUSINESS TAXATION

Topic Outlines & Reading Guide


Semester 2, 2016
This document sets out in more detail the topics that are to be discussed each class, as
well as required reading for each class.
Required reading may consist of:
1) Text Understanding Tax Law (referred to as UTL) numbers given refer to
paragraph numbers in the most recent edition (2016)
2) Legislation all legislation will be available in Core Tax Legislation
ITAA97 = Income Tax Assessment Act 1997
ITAA36 = Income Tax Assessment Act 1936
TAA = Taxation Administration Act 1953
GST Act = A New Tax System (Goods and Services Tax) Act 1999
FBTAA = Fringe Benefits Tax Assessment Act 1986
3) Cases note, the cases listed in this guide are those that you should ensure you
read as least a summary of, in either your text, casebook, or through an online
resource such as the CCH database. You may be examined on these cases. (Note,
numerous other cases will be discussed in your text and in lectures that will not be
discussed in as much detail. They will still be relevant in answering tutorial
problems, your assignment, and hypothetical problems in your final exam).

SUMMARY OF TOPICS AND TEXTBOOK CHAPTERS


NB: Please refer to the detailed topic guide each week for paragraphs to read from the
relevant chapter(s) of UTL.
(E.G: In Week 1, Chapters 1, 2 and 16 are listed there are only a small number of
paragraphs from Chapter 2 you are required to read in Week 1 and Chapter 16 is further
non-required reading)
Wk

Lecture Topic
Introduction to Australian taxation system
Jurisdictional issues
The tax formula
Income

UTL Chapter Reference


Chapter 1
Chapter 2
Chapter 16
Chapter 2
Chapter 3

Income (cont)
Tax accounting

Capital gains tax

Chapter 3
Chapter 5
Chapter 4
Chapter 6

1
2

Chapter 8

Deductions general

Deductions specific
Trading stock

Chapter 9
Chapter 11

Deductions capital allowances / capital


works

Chapter 10

Taxation of partnerships
Taxation of trusts

Chapter 14
Chapter 15

Taxation of trusts (cont)


Taxation of companies

Chapter 15
Chapter 12
Mid-Semester Break

10
11
12
13

Taxation of companies (cont)

Chapter 12
Chapter 13

Anti-avoidance
Fringe benefits tax

Chapter 17
Chapter 7

Goods and services tax


NO LECTURES

Chapter 19
-

WEEK 1 INTRODUCTION TO THE AUSTRALIAN TAXATION SYSTEM


Outline of Topic
1.1 What Is A Tax?
Why Do We Have Taxes?
Tax Policy Objectives
1.2 What Taxes Do We Have?
Historical background
Constitutional basis
Overview of the Australian tax system
1.3 Sources of Australian Taxation Law
Legislation
Cases
Rulings
1.4 The tax equations
Income tax
Taxable income
Assessable income
Deductions
Tax liability
1.5 Jurisdictional aspects
Residents vs. non-residents
1.6 Returns and Assessment [Discussed only briefly in lectures. Not examinable].
Required reading:
UTL: Chapter 1; Paragraphs 2.1 2.4, 2.31.
Legislation: ITAA97 s4-1, s4-10, s4-15, s6-5, s6-15, s6-20, s6-23, s6-25, s8-1, s8-5, s810; s36-15
Further reading (not examinable): Chapter 16

WEEK 2 INCOME
Outline of topic and reading list

Competing concepts of income


The Accounting Concept
The Economic Concept
The Judicial Concept
UTL: Paragraphs 2.5 to 2.13

Income under the ITAA97


Ordinary income
Statutory income
Exempt income
Non assessable non exempt income
UTL: Paragraphs 2.14 to 2.30

Ordinary income vs. statutory income


UTL: Paragraphs 3.1 to 3,2; 5.1

Ordinary income propositions


UTL: Paragraph 3.3

Amounts not convertible into money are not ordinary income


UTL: Paragraphs 3.4 to 3.5
Cases:
Tenant v Smith [1892] AC 150
FCT v Cooke & Sherden 80 ATC 4140
Payne v FCT 96 ATC 4407

Capital amounts do not have the character of income


The Structure v Process Approach
Mere realisation v Carrying on a business or profit making scheme
Nature of consideration given for receipt
Fixed v Circulating Capital
Examples
UTL: Paragraphs 3.8 to 3.17
Cases:
Sun Newspapers Ltd & Associated Newspapers Ltd v FCT (1936) 61 CLR 337
Californian Copper Syndicate v Harris (1904) 5 TC 159
Memorex Pty Ltd (1987) 87 ATC 5034

Amounts received as substitutes for or compensation for lost income are


themselves income
UTL: Paragraphs 3.18 to 3.20; 3.67 to 3.68
Cases:
McLaurin v FCT (1961) 104 CLR 381
Liftronic Pty Ltd v FCT 96 ATC 4425

Gifts unrelated to employment / services / business are not income


UTL: Paragraphs 3.22 to 3.24
Cases:
Scott v FCT (1966) 117 CLR 514

Proceeds of gambling and windfall gains are not income


UTL: Paragraphs 3.25 to 3.28

Mutual receipts are not income


UTL: Paragraphs 3.29 to 3.31

To be income, an amount must be beneficially derived


UTL: Paragraph 3.33

Characterisation in the Hands Of The Recipient


UTL: Paragraphs 3.34 to 3.35
Cases:
Federal Coke Co Pty Ltd 77 ATC 4255

Income generally exhibits recurrence, regularity and periodicity


UTL: Paragraph 3.36

WEEK 3 INCOME (CONT) / TAX ACCOUNTING


Outline of topic and reading list
INCOME (CONT)

Amounts derived from employment or the provisions of services are income


UTL: Paragraphs 3.37 to 3.42; 5.4, 7.1
Cases:
FCT v Blake (1984) 15 ATR 1996
FCT v Dixon (1952) 86 CLR
FCT v Harris 80 ATC 4238
Kelly v FCT 85 ATC 4283
FCT v Stone 2003 ATC 4584
Legislation: ITAA97 s 15-2; ITAA36 s 23L

Amounts derived from carrying on a business are income


What is a business?
Profit-making purpose
Repetition and regularity
Organisation and system
Size and scale of operations
Other factors
What is the scope of the business?
Role of asset in the business
Isolated business ventures
Extraordinary transactions
UTL: Paragraphs 3.43 to 3.60
Cases:
London Australia Investment Co Ltd v FCT (1977) 138 CLR 106
Californian Copper Syndicate v Harris (1904) 5 TC 159
Ferguson v FCT 79 ATC 4261
FCT v Myer Emporium (1987) 163 CLR 199
FCT v Whitfords Beach Pty Ltd (1982) 150 CLR 355
Westfield Ltd v FCT 91 ATC 4234
Montgomery v FCT (1999) 198 CLR 639
FCT v Cooling 90 ATC 4472
Scottish Australian Mining Co Ltd v FCT (1950) 81 CLR 188

Statutory income: non-cash business benefits


UTL: Paragraphs 3.6 to 3.7
Legislation: ITAA36 s21, s21A

Case:
FCT v Cooke & Sherden 80 ATC 4140

Amounts derived from property are income

Interest
Rent
Annuities

UTL: Paragraphs 3.61 to 3.66


Cases:
McCauley v FCT (1944) 69 CLR 235
Stanton v FCT (1955) 92 CLR 630

Statutory income: Royalties


UTL: 5.9 to 5.13
Legislation: ITAA97 s15-20; s995-1 definition of royalty

TAX ACCOUNTING

What is tax accounting and the importance of timing


UTL: Paragraphs 4.1 to 4.4
Legislation: ITAA97 s6-5(2)

Cash vs. Accruals basis when is each basis appropriate?


UTL: Paragraphs 4.5 to 4.12
Cases:
CT (SA) v Executor Trustee and Agency Co of South Australia Ltd (Cardens Case)
(1938) 63 CLR 108
Henderson v FCT (1970) 119 CLR 612

Derivation on an accruals basis


Legal recoverability
Advance receipts
UTL: Paragraphs 4.13 to 4.
Cases:
Arthur Murray (NSW) Pty Ltd v FCT (1965) 114 CLR 314

Derivation on a cash basis


Actual vs. constructive receipt
UTL: Paragraph 4.32
Legislation: ITAA97 s6-5(4)

Profit as assessable income (brief discussion only)


Cases recognising net profit and loss as items affecting taxable income
Time of recognition of net profit and loss
Calculation of net profit and loss
UTL: Paragraphs 4.22 to 4.31
Cases:
FCT v Whitfords Beach Pty Ltd (1982) 150 CLR 355

WEEK 4 CAPITAL GAINS TAX


Outline of topic and reading list
NB: All legislative references in this topic refer to the ITAA97 unless otherwise specified.

Introduction to CGT
UTL: Paragraphs 6.1 to 6.3

Fundamentals of CGT
Integration into income tax
Key concepts:
Net capital gain;
CGT event;
capital gain;
capital loss;
calculating capital gain and capital loss
Indexation and CGT discount
UTL: Paragraphs 6.4 to 6.24
Legislation: ITAA97 s100-10(1); s100-15; s100-45; s102-5; s102-10; s102-15; s10220; s102-25, s104-5; s115-5; s115-10; s115-15; s115-25; s115-40; s115-100.

CGT events
UTL: Paragraphs 6.23 to 6.24

CGT assets
What is a CGT asset?
Special rules for personal use assets
Special rules for collectables
Acquisition of CGT assets
Separate CGT assets
Disposal of a CGT asset
UTL: Paragraphs 6.62 to 6.84
Legislation: s108-5; Subdivision 108-B; Subdivision 108-C; Subdivision 108-D;
s109-5; s118-10.

CGT Event A1 disposal of a CGT asset


UTL: Paragraph 6.25, 6.85 to 6.88
Legislation: s104-10

CGT Event C1 Loss or destruction of a CGT asset

UTL: Paragraphs 6.26 to 6.27


Legislation: s104-20

CGT Event C2 Cancellation, surrender and similar endings


UTL: Paragraphs 6.28 to 6.33
Legislation: s104-25

CGT event D1 - Creating contractual or other rights


UTL: Paragraphs 6.34 to 6.39
Legislation: s104-35

CGT event H1 Forfeiture of deposit (brief discussion)


UTL: Paragraphs 6.46 6.47
Legislation: s104-35

Capital proceeds

General rule
Special rules
Modifications to the general rule

UTL: Paragraphs 6.89 to 6.98


Legislation: s116-5; s116-10; s116-20(1); s116-25; s116-30; s116-40; s116-45;
s116-50; s116-55; s116-60

Cost base of CGT assets


5 elements
Modifications to general rules
Former indexation system
UTL: Paragraphs 6.99 to 6.117
Legislation: s110-1; s110-5; s110-10; s110-25; s110-35; s110-36; s110-37; s110-38;
s110-40; s112-15; s112-20; s112-25; s112-30; s112-35.

Reduced Cost Base


UTL: Paragraphs 6.119 to 6.122
Legislation: s110-55

Exemptions

Pre CGT assets


Exempt assets
Exempt capital receipts
Anti-overlap provisions
The main residence exemption

UTL: Paragraphs 6.124 to 6.146


Legislation: s104-10; s118-20; s118-24; s118-25; Subdivision 118-B;
NB: THE TOPICS DISCUSSED UP TO THIS POINT WILL BE EXAMINED IN YOUR
MID-SESSION EXAM.

WEEK 5 DEDUCTIONS GENERAL


Outline of topic and reading list

General vs. Specific deductions


UTL: Paragraphs 8.1 to 8.6, 8.25
Legislation: ITAA97 s4-15; s8-1; s8-5; s8-10

Loss or outgoing
UTL: Paragraphs 8.26 to 8.27
Case:
Charles Moore & Co (WA) Pty Ltd v FCT (1956) 95 CLR 344

To the extent that


UTL: Paragraphs 8.28 to 8.37
Cases:
Ronpibon Tin NL v FCT (1949) 78 CLR 47
Magna Alloys & Research Pty Ltd v FCT (1980) 11 ATR 276; 80 ATC 4542

Incurred vs. necessarily incurred


UTL: Paragraphs 8.38 to 8.52
Legislation: ITAA97 s 8-1
Case:
FCT v James Flood (1953) 88 CLR 492
Tax office publications:
TR 97/7 - Income tax: section 8-1 - meaning of 'incurred' - timing of deductions

Nexus requirement in gaining or producing; in carrying on business

Incidental and relevant test


Essential character test
Condition of employment
Purpose
Pre-commencement expenses
Post-cessation expenses

UTL: Paragraphs 8.7 to 818; 8.21 to 8.24; 8.53 to 8.59

Cases:
Herald & Weekly Times Ltd v FCT (1932) 48 CLR 113
Amalgamated Zinc (de Bavays) Ltd v FCT (1935) 54 CLR 295
Softwood Pulp and Paper Ltd (1976) 7 ATR 101
Steele v DFCT 99 ATC 4242

Negative limbs - capital

Capital nature
Process-structure test
Circulating/fixed capital
Examples
UTL: Paragraphs 8.19, 8.60 to 8.68
Case:
Sun Newspapers Ltd & Associated Newspapers Ltd (1938) 61 CLR 337

Private or domestic nature


Relevance and character
Specific categories
UTL: Paragraphs 8.20, 8.69 to 8.80
Legislation: ITAA97 Subdivision 34-B
Cases:
Handley v FCT (1981) 148 CLR 182
FCT v Forsyth (1981) 148 CLR 203
Lunney v FCT (1958) 100 CLR 478
FCT v Payne (2001) 202 CLR 93
Mansfield v FCT (1995) 31 ATR 367
FCT v Edwards (1994) 28 ATR 87

Incurred in producing exempt or NANE income


UTL: Paragraph 8.16, 8.81
Case:
Ronpibon Tin NL v FCT (1949) 78 CLR 47

WEEK 6 DEDUCTIONS SPECIFIC / TRADING STOCK


Outline of topic and reading list
DEDUCTIONS SPECIFIC

General vs. Specific deductions


UTL: Paragraph 9.1
Legislation: ITAA97 s8-5; s8-10

Purpose of Division 25
UTL: Paragraph 9.2
Legislation: ITAA97 Division 25 (skim the titles of the sections in this division).

Repairs
Meaning of repair
Entirety and subsidiary parts
Initial repairs, terminal repairs, and notional repairs
Repairs vs. capital expenditure
UTL: Paragraphs 9.7 to 9.15
Legislation: ITAA97 s25-10
Cases:
Lindsay v FCT (1960) 106 CLR 377
FCT v Western Suburbs Cinemas (1952) 86 CLR 102
Law Shipping Co v IRC (1924) 12 TC 621
W Thomas & Co Pty Ltd v FCT (1965) 115 CLR 58
Tax Office Publications:
TR 97/23: Income tax: deductions for repairs

Borrowing expenses
UTL: Paragraph 9.18
Legislation: ITAA97 s25-25

Bad debts
UTL: Paragraphs 9.20 to 9.24
Legislation: ITAA97 s25-35

Travel between workplaces

UTL: Paragraph 9.32


Legislation: ITAA97 s 25-100
Case:
FCT v Payne (2001) 202 CLR 93

Purpose of Division 26
UTL: Paragraph 9.34
Legislation: ITAA97 Division 26 (skim the titles of the sections in this division).

Examples of items included in Division 26


Penalties
Leave payments
Related entities
Illegal activities
UTL: Paragraph 9.35 to 9.36, 9.39, 9.42.
Legislation: ITAA97 s26-5, s26-10, s26-35, s26-54
Case:
FCT v La Rosa (2003) 129 FCR 494

Gifts and donations


UTL: Paragraph 9.45 to 9.46
Legislation: ITAA97 s30-15 (and skim Division 30)
Tax Office Publications: TR 2005/13 Tax Deductible Gifts What is a Gift

Entertainment expenses
UTL: Paragraph 9.54 to 9.60
Legislation: ITAA97 s32-5, s32-10, s32-15, s32-30, s32-35, s32-40, s32-45, s32-50

Losses from prior years


UTL: Paragraphs 9.62 to 9.63; 9.66 to 9.69
Legislation: ITAA97 Divisions 35 and 36

Substantiation of expenses (brief discussion only)

UTL: Paragraphs 9.70 to 9.74


Legislation: ITAA97 Division 28 and Sub Division 900
TRADING STOCK

Basic scheme of provisions


UTL: Paragraphs 11.1 to 11.2
Legislation: ITAA97 s70-15, s70-25, s70-35, s70-40, s70-45

What is trading stock


UTL: Paragraphs 11.3 to 11.15
Legislation: ITAA97 s70-10

When is trading stock on hand


UTL: Paragraphs 11.16 to 11.18
Legislation: ITAA97 s70-15
Case:
All States Frozen Foods Pty Ltd v FCT 89 ATC 5135

Valuation of trading stock


Cost
Market selling value
Replacement price
UTL: Paragraphs 11.19 to 11.25
Legislation: ITAA97 s70-45, s70-50

Disposals not in the ordinary course of business


UTL: Paragraphs 11.26 to 11.31
Legislation: ITAA97 s70-20, s70-30, s70-85, s70-90, s70-95, s70-100, s70-105,
s70-110

WEEK 7 CAPITAL ALLOWANCES & CAPITAL WORKS


Outline of topic and reading list
CAPITAL ALLOWANCES & CAPITAL WORKS

Scope of capital allowances regime


UTL: Paragraphs 10.1 to 10.3

Key features of Division 40


UTL: Paragraph 10.5
Legislation: s40-1, s40-25

Meaning of depreciating asset


What is a depreciating asset
Meaning of plant
Boundary between Division 40 and Division 43
UTL: Paragraphs 10.6 to 10.13
Legislation: ITAA97 s40-30, s40-45, s45-10
Case:
Wangaratta Woollen Mills Pty Ltd (1969) 119 CLR 1
Imperial Chemical Industries of Australia and New Zealand Ltd v FCT (1970) 120
CLR 396

Meaning of hold a depreciating asset


UTL: Paragraphs 10.16 to 10.20
Legislation: ITAA97 s40-40

Calculating decline in value


Prime cost method
Diminishing value method
UTL: Paragraphs 10.21 to 10.32
Legislation: ITAA97 s40-65, s40-70, s40-75

Key concepts used in calculating decline in value


Meaning of cost
Meaning of base value, adjustable value, opening adjustable value
Concept of effective life
UTL: Paragraphs 10.32 to 10.50
Legislation: ITAA97 s40-175, s40-180, s40-190, s40-70(1), s40-85, s40-95, s40100, s40-102, s40-105, s40-110

Meaning of taxable purpose


UTL: Paragraphs 10.51 to 10.53.
Legislation: ITAA97 s40-25, s995-1 definition of purpose of producing assessable
income.

Balancing adjustments
UTL: Paragraphs 10.54 to 10.66
Legislation: ITAA97 s40-285, s40-290, s40-295, s40-300, s40-305, s40-310, s40315, s104-20.

Low-value pool (self-study)


UTL: Paragraphs 10.71 to 10.76
Legislation: ITAA97 s40-440

Black hole expenditure


UTL: Paragraph 10.87
Legislation: ITAA97 s40-880

CAPITAL WORKS

Basic conditions for Division 43 Deductions


UTL: Paragraphs 10.94 to 10.96
Legislation: ITAA97 s43-10

Key elements in Division 43


Capital works
Use in the required manner
Date of commencement
Construction expenditure

Construction expenditure area


Pool of construction expenditure
Your area
Undeducted construction expenditure

UTL: Paragraphs 10.97 to 10.106


Legislation: ITAA97 s43-15, s43-20, s43-70, s43-75, s43-80, s43-85, s43-90, s43115, s43-160, s43-165

Calculating the deductions


UTL: Paragraphs 10.107 to 10.108
Legislation: ITAA97 s43-25, s43-140, s43-145

Consequences of disposal
UTL: Paragraphs 10.109 to 10.110
Legislation: ITAA97 s43-40, s43-250

WEEK 8 PARTNERSHIPS & TRUSTS


Outline of topic and reading list

Introductory reading for partnerships / trusts / company topics (i.e. taxation


through intermediary entities):
UTL: Paragraphs 12.1 to 12.7

PA*RTNERSHIPS

What is a partnership for tax purposes?


UTL: Paragraphs 14.1 to 14.14
Legislation: ITAA97 s995-1 (definition of partnership)
NOTE: The Partnership Act 1892 (NSW) defines "partnership" as "the relation which
exists between persons carrying on business in common with a view to profit"
Case:
FCT v McDonald 87 ATC 4541

Basic tax treatment of partnership income


UTL: Paragraphs 14.15 to 14.20
Legislation: ITAA36 s90, s91, s92

Derivation of partnership income


UTL: Paragraphs 14.21 to 14.26
Case:
FCT v Galland 84 ATC 4053

Partners salaries and other internal transactions


UTL: Paragraphs 14.27 to 14.29
Case:
Case S75, 85 ATC 544 (see Example 14.1 and 14.2 in UTL)
Tax office publications:
Ruling TR 2005/7: Income Tax: the tax implications of partnership salary
agreements

TRUSTS

What is a trust
UTL: Paragraphs 15.1 to 15.22

What is a trust estate/trustee/beneficiaries for tax purposes


UTL: Paragraphs 15.23 to 15.25
Legislation: ITAA36 s6(1) and ITAA97 s995-1 definition of trustee

Fundamentals of the taxation of trusts


UTL: Paragraphs 15.26 to 15.28

Present entitlement
UTL: Paragraphs 15.64 to 15.77
Legislation: ITAA36 s95A(1), s95A(2), s98(1), s101
Case:
FCT v Whiting (1943) 68 CLR 199

Legal disability
UTL: Paragraph 15.78

Resident trust estate


UTL: Paragraph 15.79
Legislation: ITAA36 s95(2)

WEEK 9 TRUSTS / COMPANIES


Outline of topic and reading list
TRUSTS (continued from Week 8)

Allocating tax liabilities between trustee and beneficiaries


UTL: Paragraphs 15.29 to 15.63
Legislation: ITAA36 s95; s96; s97(1); s98(3) and (4); s98A(1); s98(1); s98(2);
s100(1); s99; s99A; s99B

Difference between trust income and tax income


UTL: Paragraphs 15.80 to 15.85
Legislation: ITAA36 s99B
Case:
Bamford v FCT (2010) 240 CLR 481 / [2010] HCA 10 (High Court Decision)

COMPANIES

Types of corporate tax systems


Classical system
Full integration
Dividend exemption system
Dividend deduction system
Shareholder relief systems
Dividend imputation systems
UTL: Paragraphs 12.8 to 12.14

The company as a tax entity


Definition of company for tax purposes
Public vs. Private companies
UTL: Paragraphs 12.15 to 12.17; 12.26 to 12.33
Legislation:
ITAA97 s995(1) definitions of "company" and corporate tax entity; s104-230; s16510; s165-12, to s165-13; s26-35
ITAA36 s103A; s109, s65, Division 7A.

Distinctive features of companies for tax purposes


Company tax rate
Payment of tax
Consolidation regime

Underlying beneficial ownership


Residency of companies

UTL: Paragraphs 12.18 to 12.24

Tax losses
Continuity of ownership test
Same business test
UTL: Paragraphs 12.89 to 12.102
Legislation: ITAA97 s165-10, s165-12, s165-13, s165-15, s165-210
Cases:
Avondale Motors (Parts) Pty Ltd v FCT 71 ATC 4101
Lilyvale Hotel Pty Ltd v FCT 2008 2009 ATC 20-094
Tax Office Publications: TR 99/19 (extracted in UTL)

WEEK 10 COMPANIES (CONT)


Outline of topic and reading list
COMPANIES

Dividend Imputation System


UTL: Paragraphs 12.34 to 12.36

Franking accounts
Franking credits
Franking debits
UTL: Paragraphs 12.37 to 12.50
Legislation: ITAA97 s205-15; s205-25, s205-30, s205-40, s205-45

Franking A Dividend
Frankable distributions
Maximum franking credit
Benchmark franking percentage
Franking period
Over-franking tax
Franking deficit tax
UTL: Paragraphs 12.51 to 12.62
Legislation: ITAA36 s202-30; s202-35; 202-40; s202-45; s202-55; s202-60; s20265; s203-40; s203-45; s203-50(1)(a); s203-50(2); s205-45; s207-50; s203-50(1)(b);
s203-50(2)

Taxation of shareholders
Dividends as income
ITAA definition of dividend
Deemed dividend
Inclusion of dividend in assessable income
Franking credits from shareholder perspective
Tax effects for different categories of shareholders
Treatment of dividends for non-residents
UTL: Paragraphs 13.2 to 13.16; 13.33 to 13.55; paragraphs 18.37 to 18.40
Legislation: ITAA36 s6(1) definitions of dividend paid; s44(1)(a); s44(1A);
s44(1B); s128B(1); s128B(3)(ga)
ITAA97 s995-1 definition of dividend; s67-30; s67-35; s207-20(1); s207-20(2);
s207-70; s207-75

WEEK 11 ANTI-AVOIDANCE / FRINGE BENEFITS TAX


Outline of topic and reading list
ANTI-AVOIDANCE

What is tax avoidance?


Tax planning vs. tax avoidance vs. tax evasion
UTL: Paragraphs 17.1 to 17.3

Rules that may override tax avoidance arrangements


UTL: Paragraph 17.4

General anti-avoidance provisions


Old anti-avoidance provision: ITAA36 s260
Elements of Part IVA
Red flags of tax avoidance
Tax avoidance penalties
UTL: Paragraphs 17.5 to 7.18
Legislation: ITAA36 Part IVA; Taxation Administration Act 1953 (Cth) Subdivision
284-C (s284-140 to 284-160) (contained in Schedule 1 to the Act)
Cases:
FCT v Peabody (1994) 181 CLR 359; 94 ATC 4663
FCT v Spotless Services Ltd (1996) 186 CLR 404 (High Court decision); see also 95
ATC 4775 (Full Federal Court decision)
FCT v Hart (2004) 217 CLR 216

Specific anti-avoidance provisions


Alienation of personal services income
UTL: Paragraphs 17.19; 17.24 to 17.25; 9.82 to 9.89

FRINGE BENEFITS TAX

Overview / Key design features of Fringe Benefits Tax (FBT)


UTL: 7.1 to 7.7

Definition of fringe benefit


Benefit
Provide
Employer and employee
Associate

Arrangement
In respect of employment

UTL: 7.8 to 7.16


Legislation: FBTAA s 136 (definitions of fringe benefit, benefit, provide,
employer, current employer, future employer, past employer, employee,
current employee, future employee, past employee, salary and wages associate,
arrangement); s 148

Calculating employers FBT liability


UTL: 7.17 to 7.23
Legislation: FBTAA s 5B; s 66

Determining the taxable value of fringe benefits


Contributions by employee
Otherwise deductible rule
UTL: 7.24 to 7.25

Specific types of fringe benefits


Note: You should skim the headings in paragraphs 7.29 to 7.53 to get an overview
of the different types of fringe benefits.
The fringe benefit discussed in depth in the lecture will be car fringe benefits and
expense payment fringe benefits.
UTL: 7.29 to 7.32 (car fringe benefits); 7.37 to 7.38 (expense payment fringe
benefits)
Legislation: FBTAA ss 7 13 (car fringe benefit), s 136 (definition of car), ss 20
20A, 23 - 24 (expense payment benefits).

Exempt fringe benefits


UTL: 7.54

Reconciliation with income tax


UTL: 7.55 to 7.58

Principles of salary packaging (brief discussion)


UTL: 7.60 to 7.61

WEEK 12 GOODS AND SERVICES TAX


Outline of topic and reading list
NOTE: The GST Act referred to in the legislative references for this topic refers to the
A New Tax System (Goods and Services Tax) Act 1999 (Cth).

Australias GST An Overview


UTL: Paragraphs 19.1 to 19.9
Legislation: GST Act Division 7

Taxable Supply
UTL: Paragraphs 19.10 to 19.17
Legislation: GST Act s9-5, s9-10, s9-15, s102-5

Taxable Importations
UTL: Paragraphs 19.30, 19.47
Legislation: GST Act Division 13

Enterprise
UTL: Paragraphs 19.18 to 19.20
Legislation: GST Act s9-20, s9-25, s195-1 definition of carrying on

Registration
UTL: Paragraphs 19.21 to 19.29
Legislation: GST Act Division 23, Division 25, Division 54, Division 57, Division 147,
s188-10

Liability for GST


UTL: Paragraph 19.31
Legislation: GST Act s9-70, s9-75

GST Free Supplies


GST free vs. Input taxed supplies
Food
Health
Education

Exports
Going concerns

UTL: Paragraphs 19.32 to 19.41


Legislation: GST Act s9-30, Subdivision 38-A (Food); Subdivision 38-B (Health);
Subdivision 38-C (Education); Subdivision 38-E (Exports); Subdivision 38-J (Going
concerns)

Input Taxed Supplies


Financial supplies
Residential rents
Residential premises
Fundraising events
UTL: Paragraphs 19.42 to 19.46
Legislation: (You do not need to read these sections in detail, an overview will
suffice): GST Act Subdivision 40-A (Financial supplies); Subdivision 40-B
(Residential rent); Subdivision 40-C (Residential premises); Subdivision 40-F
(Fundraising events)

Non Taxable Importations


UTL: Paragraph 19.47
Legislation: GST Act Division 42

Creditable Acquisitions
Legislation: GST Act, s9-5, s11-5, s11-10, s11-15, s11-20, s11-25, s11-30, s2910(3), s29-70, s29-80, s66-5, s66-10, s69-5, s69-10, s111-5, s111-10, s111-15,
s111-20, s111-25