ADVANCED DIPLOMA OF ACCOUNTING
Executive summary
This context has demonstrated the overview of the Australian taxation and definition of the entities of reporting and also non reporting. The requirement for the documentation of these entities also has briefly executed in this study. It also provides some parameters taxation for preparation of tax return in Australia. This study has described some examples of external and internal frauds of the company. It also offered the decision of ATO for the matters of the tax fraud, which may be imposed by the customers or the employees of the company. It described the circumstances by the employees of the tax office that accessed the records of taxation. It also provides a detail view of the penalties of the relevant laws in Australia. This context stated about the checklist of the agents during the preparation of the taxable income of the clients. It also showed the numerical problems for describing the left income and the deduction amount of expenses of the vehicle.
Introduction
The income tax has imposed in Australia by the “ federal government" for calculating the income which is taxable of the corporations and individuals. It is the most significant sources of income and also revenue of the system of government in "Australian taxation”. This was collected by the office of taxation of Australian instead of the federal government of that country. The purpose of the tax for the resident of the country Australia is that all amount of the earned income of people from anywhere in the world must become under the charge of the income of this country. The entitlement of the threshold of tax-free has been indicated that the individuals of that concern country do not need for paying tax amount and sometimes paid the amount of tax for levy of Medicare. The burden of state and federal has approved and also authorized by the agencies and legislators of the imposition of the country Australia. The people of that country when it does not fill up their amount tax against the earned income, then it becomes illegal, and it is subjected to penalties of criminal for the people of the country Australia.
Assessment task 1:
1. Overview of the law of Australia Taxation
The “federal government” of the country Australia has been contained the jurisdiction of tax for the resident of that country and implied the resources from the income of non-residents and also residents worldwide for calculating the actual value of their taxable income. The legislation of the country Australia contained certain specific rules for determining the tax amount of company and the individual. The main objectives of the tax for the resident of the country Australia is that all amount of the earned income of people from anywhere of the world must become under of the burden of the income of this country (Braithwaite and Reinhart, 2019). The country Australia is also regulating the system for calculating and even determining the amount of source of income is legal or not, which may be from that country or maybe from the out of that country.
The tax of state and federal has approved and also authorized by the agencies and legislators of charge of the country Australia. The entitlement of the threshold of tax-free has been indicated that the individuals of that concern country do not need for paying tax amount and sometimes paid the amount of tax for levy of Medicare. The transactions of the individual or company which has done internationally and depends on different numbers of broad rules and circumstances of the country. The credits amount of the individual of the country Australia has been paid to the office of tax as followed by the laws of Australian taxation (Bhatti, 2015).
[Referred to Appendix 1]
2. Definitions of non-reporting and reporting entities
The reporting entities have been stated in the Australian taxation that it is one kind of body which is responsible and depends on the objectives and purpose of the financial report of that country. It is also gaining the thoughts and also understanding of value and position of economic and their performance. The legislation of the country Australia contained certain specific rules for determining the tax amount of company and the individual. The main objectives of the tax for the resident of the country Australia is that all amount of the earned income of people from anywhere of the world must become under of the charge of the income of this country (Emery, 2016). It has been contained the information and report of financial of the country Australia. The users of these reporting entities are those employees, shareholders, creditors, members, investors, lenders and many more of that country.
The non-reporting entities have been charged and determined with the governance of the country Australia. The entities of the non-reporting permitted for preparing the objectives and purpose of the report of finance of that country. This has also determined the framework of the report of financial. For example, the entity of non-reporting has included a few numbers of stakeholders of the private companies in Australia.
Figure 1: Types of entities
3. The requirement of documentation for reporting entities
The reporting entities in Australian taxation demonstrated that the dependant users on “ general purpose financial report" (GPFR) had gained the performance and the understanding of the position of finance of that entity. The decision of the report of reporting entities has been based on the information of investment of the country Australia. The measurement of efficiency and the performance of these entities depend on documentation. It was also gaining the thoughts and also understanding of value and position of financial and their performance. The legislation of the country Australia contained certain specific rules for determining the tax amount of company and the individual. The actual and real information is helping for calculating the exact value of taxable income of the individuals of the country Australia (Freudenberg et al. 2017). It regulated the compliances of the report of finance and also the auditing of that country. The requirement of documentation for reporting entities, for this reason, is needed.
4. The provision of documentation for non-reporting entities
The bodies of the non-reporting in Australian taxation stated that it permitted for preparing the objectives and purpose of the report of finance of that country. This has also determined the framework of the story of financial. The requirements and obligations of auditors and directors have considered the entity of the non-reporting in the country Australia. The provisions of documents have been needed when the consolidated reports of finance prepared (researchgate.net, 2019). This report cannot be adequately formed without proper verification of records of the non-entities of the company of that country. This has also determined the framework of the release of financial. This report has been executed for the limited users of the group of company of the country Australia. It applied for constructing the reporting of non-specific industry and an organization (hallandwilcox.com.au, 2019). The requirements of documentation for reporting of, for this reason, are needed in Australian taxation.
5. Parameters of taxation for preparing the tax return
The individuals or company can avoid the delay processing of their tax return by using and following of proper instruction of tax return. The parameters of taxation in the time of preparation of tax return are discussed below:
- The individual or company should firstly check their number of tax file of their taxable income.
- After that, they should fill up their details, especially check their "date of birth”.
- They should have their details appropriately about their electronic transfer of funds that they have paid directly.
- Completed tests of items of incomes “IT1 to IT8”.
- The written total amount of tax withheld, the total amount of supplement loss of income, total amount of tax offsets.
- They should complete their details of spouse and also provided their signature on their file of a tax return.
- Attached all copies of provided documents which instructed the amount of their tax return.
- All relevant papers and attachment and copies of the amount of their tax return should keep for their records (Bhadily and Hosie, 2016).
6. Purposes of practice statement of corporate management
The "authority of the commissioner has issued the practice statement of organizational management", and it must be conducted with "PS CM 2003/01”. It has endorsed the policy of corporate and it followed by the employees of the Tax Office. The non-ongoing and also ongoing employees must be compiled and attached to the practice statement of corporate management.
The purpose of the practice statement of organizational management has stated in under section 13(5) of the Public Service Act 1999. It described the circumstances by the employees of the tax office that accessed the records of taxation. This record has been contained and obtained the information for the law of taxation (Biddle et al. 2018). The legal and authentic custodian is the commissioner for these records. It was also known as the records of taxation for the commissioner's possession.
7. Examples of external frauds
The cases of the external frauds have given below:
- The theft amount of stocks and cash by the employees of an organization
- The employees sometimes have not charged for payment of provided service to their family, accomplices and friends.
- The theft amount of stock and cash by other numbers of employees.
- The employees have allowed their accomplices for using lousy credit
- The supplying of receipt accepts as the return of funds by the employees
- The employees of an organization sometimes have been granted their friends for stealing and participating in the scams of delivery of goods (Black, 2016 ).
9. Decision tree of ATO for dealing with related matters of taxation frauds
ATO has detected, responded and prevented the internal, external and also other issues of integrity related. It has been managed the risk of internal and external frauds. The external parties and taxpayers seek for exploiting the system of tax against the scam of taxation. The external fraud has arisen where the representatives and taxpayers obtained the benefit of ATO.
The IGT examine examines the penalties and approaches of compliances of ATO.
The strategy of ATO for preventing the fraud or crime of tax is discussed below:
- The systematic solutions have removed the opportunity of a committed crime of people, and it avoided the detection
- The approaches of “whole crime treatment” has also provided the changes for a "long period" by removing an opportunity of a repeat offence.
- The firm has taken action against the employees or people who have not done the right things and also removed the amount of profit from their statement of income.
- The measurement of prevention of their tax crime has designed for the corporation and trusted system of the third party.
- The framework of their administrative and legal has given focussed for the elimination of the opportunities of the tax crime.
- The engagement solutions of contemporary and innovative have been used for considering of channel, content and the characteristics of the audience.
- Their provided information or the data has shared the framework of supportive detection in timely (Cherry, 2016).
- The strategies of compliance have been focused on achieving and also gaining the improvement of sustainable for the respect of voluntary.
10. Prosecution provisions and penalties under relevant statutes/laws
Fines or penalties are one kind of punishments or penalties of monetary which has imposed and authorized by the courts of criminal. The standard proof for that is required. Pecuniary penalties are another kind of fines of money that has collected and imposed by the authorized civil courts of Australia. The standard proof has applied for that. The "part IV of the CCA” has prohibited the practices of anti-competitive; these are:
- The conduct of cartel
- The handling of exclusionary
- The misusages of power of the market
- The exclusive dealing
- Maintenance of retail price
- Support of mergers of anti-competitive (Du Plessis, 2016).
The maximum amount of penalties for “the breaches of part IV” has stated for corporations:
- $10000000
- The court can be determined the value, benefit and “reasonably attributable”.
- The court has not to be determined the benefit of the amount of 10% turnover annually for the twelve months preceding
- For the individuals, the amount is $500000
- For the corporations, the amount is $750000, and for the individuals, the amount is $ 500000.
As per under section 155 the penalties has been granted for the people who are non-compliance by the notice of s155 and the court imposed them for the amount of excellent $21000 or the imprisonment of two years for the company and individuals. [Referred to Appendix 4]
Assessment task 2:
Checklist for preparation of tax
The responsibility of the tax agent for the development of charge is discussed below:
a)Personal information
The agent of the command should firstly gather the personal data of their client in a time of preparation of the tax return in Australia. The documents have paid tax for the last years of the individuals and also a company or a firm. These both are federal if they are applicable for the calculating of their taxable income. The agent should state the amount of their tax return for that specific year. They are not necessary for the basis of a strict position. The agent should fill up the used documents of the last year. The individual or company should firstly check their number of tax file of their taxable income and after that; they should fill up their details. The agent should have their details appropriately about their electronic transfer of funds that they have paid directly. The written total amount of tax withheld the total amount of supplement loss of income,
the total amount of tax offsets (Greggi, 2017). They should complete their details of spouse and also provided their signature on their file of a tax return. The agent should attach all copies of submitted documents which instructed the amount of their tax return. All the relevant papers and attachment and photographs of the amount of their tax return should keep for their record. The enrolment of the numbers of social security for the client and his depended parents, spouse and other family members are necessary. The agent should gather all these documents of the clients for calculating the actual and accurate amount of the tax for the specific year.
b) Proper checking of income
The agent of the fee has been gathered all these documents of the clients for calculating the actual and accurate amount of the tax for the specific previous year.
- W2 forms: The employers of the company or organizations have must be issued for these all kinds of documents for calculating the tax amount by "January 31”. The agent of the tax should keep their eyes on the electronic and physical mailboxes (Martin et al. 2017).
- One thousand ninety-nine forms: Each document of the clients for calculating the actual amount of their taxable income should be ended with various types of suffix. It has been depended on the mood of payment which the agent has received from the clients. If the agent has paid the amount through the third party, these are Amazon pay, Paypal and many more. The amount of the earnings investment has been shown that 1099 INT for calculating the amount of interest, 1099 DIV for the calculating of the number of dividends of organizations and 1099-B for calculating the number of transactions of broker handled of the company.
Figure 2: Forms use for checking of income
The agent for the preparation of calculation of tax amount should complete their details of spouse and also provided their signature on their file of a tax return. The agent should attach all copies of submitted documents which instructed the amount of their tax return. The agent must be calculated the amount of dividend and their daily transaction amount of business. T has endorsed the policy of corporate and it followed by the employees of the tax office. The non-ongoing and also ongoing employees must be compiled and attached to the practice statement of corporate taxation in Australia. The agent should always gather the authentic documents from their clients for calculating the original value of the taxable income of their clients. The copies of all these documents also guided the preparation of the tax. The agent should check properly all the records of the income of their client for calculating the charge for the specific previous year.
The individuals and the company also provide the authentic details documents of their statement of income for the particular past year to the agents of the tax office (Mousavi, 2015). This allows the agents during the time of the preparation of the amount of the tax for calculating the actual amount of the taxable income of their clients.
The deduction has helped for reducing the amount of payable amount of the individuals or the company for the specific previous year. It generally contained the meaning of the lower amount of tax bill of the clients. The critical documentation for the claiming of deduction can be projected the clients during the time of auditing and cutting the amount of the tax bill. It will take time for the gathering of record documents on the time of preparations of the tax to the agents in Australia. Some popular deductions of the fee are discussed below:
i) account contributions for retirement
The agent can deduct the number of contributions to the retirement account of self-employed and the traditional IRA. This agent should sure about the limit of the gifts during the preparation of the tax.
ii) expenses of education
The student may arise the claim for deduction of the tuition fees which they have already paid and paid the amount of interest for their education loan. The IRS has not accepted their request of deduction without the form 1098 T, and it showed all amount of transactions of their education. The way 1098 E has revealed the details of their student loan (Murray, 2015 ).
iii) medical bills
The cost amount of the therapeutic has provided the amount of tax savings. This amount can more than 7.5 % of the total adjusted amount of gross income of the taxpayers.
iv) Mortgage interest and property taxes
The payment amount of the mortgage has included the escrowed amount for their property tax. The documents have been shown the amount of the claim of their loan interest.
v) Charitable donations
The agents should ensure the payoff amount of charitable contributions on the time of preparations of the tax. The IRS has disallowed the claim of the clients if they have not done their verification.
vi) Classroom expenses
The teacher and other educators can be deducted the amount of $250 approx. From their spending amount of classroom items supplies. The critical documentation for the claiming of deduction can be projected the clients during the time of auditing and cutting the amount of the expenses of the classroom (clear tax .in, 2019). The agent should check all these documents of classroom supplies for deduction from their taxable income.
vii) Local and state taxes
The agent can deduct the number of various kinds of fees that may include the local and state income or the costs of sales. They can deduct $10000 approx from the local and state level income of the clients during the time of preparations of the price (Richardson, 2016).
Figure 3: Checking of the deduction amount
d) Proper checking of credit amount
The agents should prepare the checklist of the credit amount during the time of preparations of the tax. They have provided cuts amount of own funds. Some popular deductions of the tax credit are discussed below:
i) Lifetime learning and American opportunity credits
This type of loan which is related to education can save a certain amount of money from the taxable income of the clients. The individuals and the company also provide the authentic details documents of their statement of income for the specific previous year to the agents of the tax office. This allows the agents during the time of the preparation of the amount of the tax for calculating the actual amount of the taxable income of their clients. The agent should check all the details of the documents of lifetime learning of their clients during the time of preparation of the tax for the specific previous year.
ii) credit of child tax
The worth amount of the standard praise for child tax is $2000 for per independent child. If the family wants to adopt another child, then they should earn the eligibility for the number of tax credits. The agent should check all documents of the clients for calculating the actual amount of their taxable income should be ended with various types of the suffix. It has been depended on the mood of payment which the agent has received from the clients. This process allows them to deduct a certain amount of tax from the taxable income of the clients (Umar et al. 2017).
iii) Saver’s credit
The contributions credit of the retirement savings of the clients also deduct the tax. The agent should check all the documents of the income of their client for calculating the charge for the specific previous year correctly. The critical documentation for the claiming of deduction can be projected the clients during the time of auditing and cutting the amount of the expenses (business.unsw.edu.au, 2019). The individuals and the company also provide the authentic details documents of their statement of income for the specific previous year to the agents of the tax office. The agents should check all these documents of the clients during the preparation of the tax of the particular past year.
Figure 4: Checking of credit amount
e) Proper checking of payments amount
Most of the taxable income has to be check by the agents, which deduct the amount of the tax liabilities. This amount should be provided on W2 forms. The deduction has helped for reducing the amount of taxable amount of the individuals or the company for the specific previous year.
The agent should attach all copies of provided documents which instructed the amount of their tax return. The agent must be calculated the amount of the income and their daily transaction amount of business. This record has been contained and obtained the information on the law of taxation. The legal and authentic custodian is the commissioner for these records. The agent should state the amount of their tax return for that specific year. They are not necessary for the basis of a strict position. The agent should fill up the used documents of the last year. The individual or company should firstly check their number of tax file of their taxable income, and after that, they should fill up their details (van Fossen, 2015). The agents monitor the various issues which they filter for further rectification. They should make the checklist as per the situation of the clients for the preparation of the tax.
Assessment task 3:
Case study 1
Calculation of taxable income of Jenny for the year 30th June 2012
| Particulars | Amount($) |
|---|---|
| normal gross earnings | 136200 |
| annual leave income | 100934 |
| PAYG amount | 1768 |
| taxable elements | 147236 |
| Less | |
| tax-free components | 32124 |
| total taxable income | 354014 |
Case study 2
Calculation of maximum deduction of Adam for the motor vehicle expenses
cents per kilometre method
Table 1: cents per kilometer method
Logbook method
Table 2: Logbook method
Conclusion
Australian law of taxation has provided the conceptual and comprehensive framework for understanding the topical issues of the tax in Australia. It also contained the analysis of the rulings, case law and relevant legislation for the current financial year. It also covered superannuation, income tax, service and goods tax, state taxes and many more. This context also contained the rate of fees for the agents of the tax office. The documents of charge of the last years of the individuals and even a company or a firm have described. These both are federal if they are applying for the calculating of their taxable income. It also provides the latest reforms of legislative of the court for the taxable income in Australia.
Reference List
Book
Braithwaite, V. and Reinhart, M., 2019. The Taxpayers' Charter: Does the Australian Tax Office comply and who benefits?. Centre for Tax System Integrity (CTSI), Research School of Social Sciences, Australia: The Australian National University.
Journals
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- Umar, M.A., Derashid, C. and Ibrahim, I., 2017. What Is Wrong With the Fiscal Social Contract of Taxation in Developing Countries? A Dialogue With Self-Employed Business Owners in Nigeria. Sage Open, 7(4), p.2158244017745114.
- Van Fossen, A., 2015. Law and political economy in Vanuatu's tax haven. Pacific Islands Monthly, 1, p.00.
Online Articles
- researchgate.net, 2019,A Critical Evaluation of Australian Mineral Resources Rent Tax , Available
- at:https://www.researchgate.net/profile/Michael_Kortt/publication/301779808
_A_Critical_Evaluation_of_Australian_Mineral_Resources_Rent_Tax/links/5acb2c6d0f7e9bcd519928dd/A- - Critical-Evaluation-of-Australian-Mineral-Resources-Rent-Tax.pdf[Accessed on: 06.05.2019]
- business.unsw.edu.au ,2019,Australian tax deduction, Available at:https://www.business.unsw.edu.au/About-Site/Schools-Site/Taxation-Business-Law-Site/Documents/e-filing_and_Compliance_Risk.pdf/[Accessed on: 06.05.2019]
Websites
- hallandwilcox.com.au,2019, Australian taxation, Available at:https://hallandwilcox.com.au/a-guide-to-taxation-in-australia/[Accessed on: 06.05.2019]
- cleartax.in ,2019,Leave encashment, Available at:https://cleartax.in/s/leave-encashment-tax/[Accessed on: 06.05.2019]
