Taxation Law



Taxation Law

Introduction

The purpose of this study is to expand the boundaries of our knowledge by exploring some relevant material relating to the analysis of taxation law. The tax law is the special field of public law, it is the assessment or collection of tax controls. Tax Law is a set of regulations governing the generation, determination and the expiration of tax liabilities and obligations of taxpayers and collectors of individual taxes. Tax law is also applicable procedures that should be followed by the tax authorities and perform other operations to determine the correct amount of tax liability and effective tax collection.

Tax law is one of the sub-branches of financial law. The tax law is a separate jurisdiction. It includes all the legal standards that govern the taxation of Australia. Taxation situations and legal terms should be defined independently. The Australian Taxation Office (ATO) monitors the compliance with tax laws and is responsible for the collection of taxes. The main taxes are described briefly below (Woellner, 2012):

Income Tax: This is the main source of income for the state. The basic tax rate, which reaches from income above the exemption level of 6,000 Australian dollars, is 17 per cent. For people not living permanently in Australia, the taxation of income begins at the time they earned dollars at a rate of 29 percent. In recent years, there were modest reductions in the income tax burden, for example, the top tax rate is applied only at higher incomes, and simplifications have been introduced for non-living people permanently in Australia.

Corporate income tax: The corporate tax rate is 30 percent on corporate profits. Losses of a company can only be offset against future profits; a handover of the losses to shareholders is excluded.

Capital Gains Tax: The realized capital gain is included in the income tax return of the taxpayer.

Withholding Tax: This is a withholding tax on interest generated in Australia and dividend income or royalties from non-resident persons in Australia. The rate on such income for persons is 10 percent, only dividend payments from already taxed profits by companies are tax free.

Fringe Benefit Tax: This is a tax on fringe benefits; an example would be the free supply of a company car for private use. The specialty of this tax is that it is paid by the employer and the employee's performance receives tax-free.

Capitalization: In Australia, there are rules against "thin capitalization". The aim is to avoid that companies reduce their Australian tax burden of excessive debt financing. The foreign debt may exceed 75 percent of the total assets of the company.

Goods and services tax: This tax was first introduced in 2000 and is a comprehensive consumption tax.

Inheritance and Gift Tax

In this paper, the author will answer two different questions related to the assignment of taxation law. First, the author will determine different categories of fringe benefits. Second, the author will calculate the capital gain under indexation and discount method.

Discussion & Analysis

Question # 1

Fringe benefits are the additional perks that a ...