Tax Articles

The hybrid mismatch rules contained in Division 832 of the Income Tax Assessment Act 1997 (Cth) commenced effect in 2019. The rules are broadly designed to prevent taxpayers from exploiting differences in the operation of the tax laws of 2 or more countries by way of...

The term present entitlement broadly refers to the right of a beneficiary to a share of trust income. The present entitlement concept derives from trust law principles and is borrowed under by taxation laws as a way of determining who should be assessed on the...

A bad debt refers to money owed to a person from a customer or debtor that cannot be recovered. The meanings of bad and debt are worth addressing in further detail as they inform the right of a taxpayer to claim a deduction under section 25-35 and 8-1 of the Income...

A private ruling is written advice from the Australian Taxation Office about the way taxation law may apply to a particular taxpayer arrangement (a scheme), including a proposed future arrangement. The rules relating to private rulings are primarily contained in...

What is Queensland Land Tax? Land tax in Queensland is a state imposed tax assessed annually based on the freehold land possessed as of midnight on June 30 each year. Freehold land refers to land that is privately owned, excluding state owned land or land leased from...

Part IVA of the Income Tax Assessment Act of 1936 contains the income tax general anti-avoidance rule (GAAR). The GAAR operates alongside a number of other specific anti-avoidance rules contained in Australian tax law. The GAAR is subordinate to the operation of those...

What is debt funding and equity funding? There are broadly two major categories of funding available to a business: debt funding and equity funding.   From a basic legal point of view and in the context of capital raising, debt funding refers an arrangement which...

What is an assignment?   An assignment involves an entity or individual (the assignor) transferring contractual rights and benefits to another entity or individual (the assignee).   For example, assume John enters into a contract with David. Under the contract, John...

The most common way a taxpayer will be eligible for a deduction on business related expenditure is by satisfying the criteria of section 8-1 of the Income Tax Assessment Act 1997.   That provision provides that a taxpayer can deduct any loss or outgoing to the extent...

A foreign resident of Australia for tax purposes is generally only subject to Australian tax on Australian sourced income. However, when it comes to capital gains tax, a foreign (tax) resident will not recognise a capital gain or loss on a CGT event which occurs to a...

What is TOFA?TOFA (Taxation of Financial Arrangements) is a tax framework that focuses on taxing the gains and losses from financial transactions based on their actual economic impact, rather than just their legal structure. In simpler terms, it ensures that the...

What is NANE income? Non assessable non exempt income (NANE) refers to specific types of income that are defined by tax laws or other Commonwealth legislation in Australia as being neither subject to tax (non assessable) nor exempt from tax. This classification has...

What is exempt income?Exempt income means any amount of ordinary income or statutory income that is not subject to taxation due to specific provisions in the Income Tax Assessment Acts (Acts) or other Commonwealth laws.Exclusion of ordinary income from assessable...

An employee is an individual who works under the supervision of an employer as a representative of their business receiving in return wages or other remuneration. While an employee might have some freedom such as flexible hours, the employer has the right to manage...

What is an employee share scheme?An employee share scheme (ESS) is a scheme under which shares, stapled securities or rights to acquire such shares or securities in a company (known as ESS interests) are provided to an employee, a person in an employee like...

What is intellectual property?Intellectual property IP encompasses a range of intangible assets and rights held by a taxpayer. This includes rights held by a taxpayer as the owner or licensor of patents, registered designs, copyrights and so forth. The definition of...

The distribution of profits made by professional firms to the controllers of a business and their associates may present tax complications. Professional firms here refers to professional practices such as accounting firms, architectural firms, engineering firms,...

What is a testamentary trust?A testamentary trust is essentially a trust that is established through a person's last will and testament. Unlike discretionary or family trusts, which are typically created separately during an individual's lifetime through a trust deed,...

What is a hire purchase agreement?A hire purchase agreement commonly refers to a contractual arrangement whereby a person or entity (the lessee) acquires from another person or entity (the lessor), the right to use an asset and a subsequent right or obligation to...