Chapter 1

Understanding the Australian Tax System

In This Chapter

arrow Breaking down the tax system

arrow Progressing through the tax rates and rules

arrow Determining sources of income

arrow Paying tax if you’re a company

I f you find tax a — excuse the pun — taxing subject, you’re not alone. Most people are confused by taxes and, of course, would rather not pay them. However, we all know the cliché: Death and taxes are the only sure things in life. So, put another way, you probably need to take some time to understand taxation.

This chapter goes over some basic info that you need to understand in order to lodge your tax return in Australia. I explain the basics of the Australian tax system, tell you how to work out sources of income, and examine what tax you need to pay if you’re setting up as a company.

Explaining the Australian Tax System

In Australia, two income tax assessment Acts are used by the federal government to levy tax on taxable income. They’re equivalent in size to four telephone books and are the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997. (The reason for two ...

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