Australia's Taxation System and Goods and Services Tax (GST)

Flashcards covering the foundational vocabulary and legal frameworks of the Australian taxation system, specifically focusing on Constitutional powers and the Goods and Services Tax (GST).

Tax

A compulsory exaction of money by a public authority for public purposes, enforceable by law, and is not a payment for services rendered (Matthews v Chicory Marketing Board (1938)).

Tax Base

The specific value or item upon which a tax is levied, such as taxable income for income tax or taxable supplies for GST.

Tax Period

The specific timeframe for which tax is calculated and reported, such as the financial year for income tax or the FBT year ($1$ April to $31$ March).

Progressive Tax Rate

A tax structure where the tax rate increases as the taxable amount increases, applied to resident and foreign resident individuals in Australia.

Flat Tax Rate

A tax rate that remains constant regardless of the amount of the tax base, such as the company income tax rate.

Section 51(ii) of the Constitution

Grants the Commonwealth Parliament the power to make laws with respect to taxation, provided they do not discriminate between States or parts of States.

Section 90 of the Constitution

Provides that customs and excise duties can only be imposed by the Commonwealth Government.

Imposition Act

A statute that imposes the actual liability for a tax, such as the Income Tax Act 1986 (Cth).

Rates Act

A statute that specifies the applicable rate of tax to be applied, such as the Income Tax Rates Act 1986 (Cth).

Assessment Act

A statute that sets out the rules for working out what is subject to tax or how to calculate the tax payable, such as the ITAA36 and ITAA97.

Private Ruling

A ruling issued by the Commissioner of Taxation that determines how tax laws apply to a specific transaction for a particular taxpayer.

Public Ruling

A ruling issued by the Commissioner of Taxation that sets out the Commissioner's views on how a provision of an Act should be applied generally.

Multi-stage Tax

A tax system, like GST, where tax is effectively charged on the value added at each stage of the supply chain and collected at each stage with a credit mechanism.

Value (GST)

The GST-exclusive price of a supply.

Price (GST)

The GST-inclusive amount of a supply, calculated as Value + GST.

Taxable Supply

A supply defined under s $9-5$ of the GST Act that is made for consideration, in the course of an enterprise, is connected with the indirect tax zone, and is made by a registered entity.

Supply (s 9-10)

Any form of supply whatsoever, including goods, services, advice, grants of real property, or the creation or surrender of rights.

Mixed Supply

A supply that can be unbundled into separately identifiable parts, where each part is treated separately for GST purposes requiring apportionment.

Composite Supply

A supply consisting of a dominant part and ancillary/integral parts, treated as a single supply taking the characterization of the dominant part.

Consideration (s 9-15)

Any act or forbearance in connection with a supply, including money, goods, services, or barter transactions.

Enterprise (s 9-20)

An activity or series of activities conducted in the form of a business, an adventure in the nature of trade, or leasing property on a regular basis.

Indirect Tax Zone

Defined in s $195-1$ as essentially referring to Australia.

Registration Turnover Threshold

The annual turnover level ($75,000$ for most entities or $150,000$ for non-profits) at which an entity is required to register for GST.

Taxi Travel (s 144-5)

Transporting passengers by taxi or limousine for fares; suppliers must register for GST regardless of turnover.

Taxable Importation (s 13-5)

Goods imported into Australia and entered for home consumption, where GST liability falls on the receiver.

GST-free Supply

A supply where no GST is charged ($0\%$ rate) but the supplier can still claim input tax credits (e.g., fresh food, medical services, education).

Input-taxed Supply

A supply where no GST is charged to the consumer, but the supplier cannot claim input tax credits for the inputs used (e.g., financial supplies, residential rent).

Going Concern (s 38-325)

A GST-free supply of a business where the supplier provides all things necessary for continued operation and both parties agree in writing.

Out-of-scope Supplies

Supplies falling outside the GST Act that have no GST consequences, such as salaries, wages, donations, and dividends.