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Jonathan Teoh, Monash University
Understanding tax law:
Accounting standards vs tax legislation
Interpretation of financial accounting standards is different to
tax legislation:
PoTL 2015 paragraphs [1.30] [1.40]
Understanding tax law:
Accounting vs taxation law advice
The level of certainty providing financial accounting advice is
different to taxation law advice:
PoTL 2015 paragraphs [1.50] [1.60]
Technical differences between tax law and
accounting 1. Not all receipts are recognised for tax purposes
PoTL 2015 paragraphs [1.80] [1.100]
Technical differences between tax law and
accounting 2. Income tax law distinguishes between capital and revenue expenses
PoTL 2015 paragraph [1.110]
Technical differences between tax law and
accounting 3. Income tax law excludes some income and expenses for policy reasons
Used by politicians to achieve a variety of social and
economic objectives.
PoTL 2015 paragraph [1.120]
Technical differences between tax law and
accounting Accounting income can be categorised into three boxes for income tax purposes:
PoTL 2015 paragraphs [1.150] [1.160]
Technical differences between tax law and
accounting Judicial tests to characterise a gain as ordinary income:
PoTL 2015 paragraph [1.170]
Technical differences between tax law and
accounting 4. Income tax law ignores some transactions on the basis of anti-avoidance provisions
Accounting measures net profits on an entity-by-entity basis.
Taxation law has tax avoidance provisions that can negate
the tax benefit derived from some transactions.
PoTL 2015 paragraph [1.130]
Technical differences between tax law and
accounting 5. Timing rules differ in income tax law and accounting principles
PoTL 2015 paragraph [1.140]
Sources of tax law
The main sources of tax law are:
PoTL 2015 paragraph [1.180]
Sources of tax law:
Legislation Income tax Two concurrent assessment statutes: Income Tax Assessment Act 1936 (Cth) (ITAA36) Income Tax Assessment Act 1997 (Cth) (ITAA97) Employment fringe benefits Broadly, a tax imposed on an employer providing fringe benefits to an employee. Fringe Benefits Tax Assessment Act 1986 (Cth) (FBTAA) Goods and services tax Consumption tax: A New Tax System (Goods and Services Tax) Act 1999 (Cth) PoTL 2015 paragraphs [1.190] [1.260]
Sources of tax law:
Case law Meaning of words in tax law is derived from judicial precedent or decisions of courts interpreting past cases. How binding the precedent depends on the level of the court: Ranges from the Australian High Court to decisions of the Administrative Appeals Tribunal (administrative body with less authority than a court).
PoTL 2015 paragraph [1.270]
Sources of tax law:
Rulings The statutory officer administering the tax laws, being the Commissioner of Taxation, issues Rulings. Various types of rulings include:
"The Language of Business: How Accounting Tells Your Story" "A Comprehensive Guide to Understanding, Interpreting, and Leveraging Financial Statements for Personal and Professional Success"