Isolated transactions: current income tax implications

Profits from isolated transactions will often be potentially caught by the capital gains tax provisions of the income tax legislation. Because the provisions usually tax gains at concessional rates but only apply to gains that are not otherwise taxable, it is important to determine when gains from isolated transactions constitute ordinary income. This article discusses when isolated transactions generate ordinary income, as well as briefly mentioning what statutory provisions they might be assessable under. Isolated transactions will generate ordinary income when the transaction has the sufficient indicia of a business, or when it comes under one of the strands of Commissioner of Taxation (Cth) v Myer Emporium Ltd (1987) 163 CLR 199. However, the law in this area is complex and unclear in parts. The relevant tax ruling, TR 92/3, is incomplete and at times inaccurate and so is of very limited assistance.

Income tax test, materials & essential cases

A comprehensive cases and materials book intended for commerce or law students undertaking semester-length courses in Australian income tax law.

Concise income tax

This is a thorough yet concise examination of the most significant areas of taxation law. Cassidy identifies the key elements underlying the statutory provisions, uses a plain English writing style, and a simple, clear format. The text discusses the relevant provisions of the Income Tax Assessment Act 1997.

Concise income tax

Major changes have been made to a number of aspects of Tax Administration, such as the taxation penalty regimes, methods of lodging tax returns and types of Rulings issued by the ATO.

Concise income tax

The fourth edition of this standard text on taxation law continues to provide a comprehensive, yet succinct, examination of the most important areas of income taxation law. Almost every chapter in the book has had to be updated to reflect recent legislative amendments and judicial determinations including the changes to tax administration, particularly with regard to non-ruling ATO advice, rulings, and amended assessments; the controversial promoter penalty provisions which were introduced to deter the promotion of tax avoidance schemes; the new category of taxpayers, "temporary residents," who enjoy many of the benefits of non-residents; the significant expansion of the allowable expenses for capital gains purposes which has arisen as a result of changes to the cost base; the limiting of the deductibility of losses and outgoings pertaining to certain illegal activities; and the increase in the types of expenses that may be deducted under the "blackhole" provisions in Div 40-I.

Income tax treatment of financial instruments : theory and practice

Examines the theoretical and practical aspects of the treatment of financial instruments under a realisation-based income tax. Argues that, within such a context, a system of expected-return taxation in preferable. The argument is developed through a review of the academic literature and selected legislative regimes.

A factor-augmented VAR approach : the effect of a rise in the US personal income tax rate on the US and Canada

In this paper a factor-augmented vector autoregressive (FAVAR) model is estimated to characterize the dynamic effects of shocks in the personal income tax rate in the United States on United States and Canadian economies. The representation and the estimate of the FAVAR model is based on Stock and Watson (2005) and the shocks are recovered applying the identification scheme proposed by Bernanke et al. (2005); this method allows impulse response functions to be generated for all the variables in the dataset and provides a description of the domestic and international transmission mechanisms of United States movements in the personal income tax rate. A distinguishing feature of our model is the disaggregation of traded goods sector where imports and exports are disaggregated into 12 and 13 industries, respectively. This provides extra information on the domestic and international transmission mechanism across the two countries. The results show that the FAVAR approach generates a reasonable characterisation of the effects of United States movements in the US personal income tax rate on the United States economy and its transmission to the Canadian economy.

Education, preferences for leisure, and the optimal income tax schedule

Recent advances in dynamic Mirrlees economies have incorporated the treatment of human capital investments as an important dimension of government policy. This paper adds to this literature by considering a two period economy where agents are di erentiated by their preferences for leisure and their productivity, both private information. The fact that productivity is only learnt later in an agent's life introduces uncertainty to agent's savings and human capital choices and makes optimal the use of multi-period tie-ins in the mechanism that characterizes the government policy. We show that optimal policies are often interim ine cient and that the introduction of these ine ciencies may take the form of marginal tax rates on labor income of varying sign and educational policies that include the discouragement of human capital acquisition. With regards to implementation, state-dependent linear taxes implement optimal savings, while human capital policies may require labor income taxes that depend directly on agents' schooling.

Sacrifice and efficiency of the income tax schedule

We investigate the efficiency of equal sacrifice tax schedules in an economy which primitives are exactly those in Mirrlees (1971): a continuum of individuals with identical preferences defined over consumption and leisure who differ with respect to their labor market productivity. Using a separable specification for preferences we derive the minimum equal sacrifice allocation and recover the tax schedule that implements it. The separable specification allows us to use the methodology developed by Werning (2007b) to check whether the schedule is efficient, that is, whether there is no alternative tax schedule that raises more revenue while delivering less utility to no one. We find that inefficiency does not arise for most parametrizations we use to approximate the US economy. For the few cases for which inefficiency does arise, it does so only for very high levels of income and marginal tax rates.