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| Welcome to the May edition of ConTax |
Another Membership year has almost flown by as June 30th fast approaches. The new Membership year commences on 1st July.
If you are completing university I would highly recommend to you full membership of the Taxation Institute. As a gesture to encourage new and young Members to the Taxation Institute, we have reduced the Affiliate Membership fee to $290.00 inc GST for Members inside Australia. This is a saving of $150 off the normal membership fee. For more information click here.
Membership with the Taxation Institute will ensure that you have access to the best tax education, products and services available to the tax profession, as well as enable you to gain exposure to future employers and mentors from around the country. It is essential for anybody who is serious about a career in tax.
For those of you who are looking for a practical, hands on post graduate course, designed to bridge the gap between university the workplace , you should also be aware of the Taxation Institute’s Structured Education Program, in particular Foundation Tax. For more information, click here.
We look forward to welcoming new Members to the Taxation Institute and into the tax profession, and continuing to support you throughout your entire career.
Yours sincerely,
Noel Rowland
CEO, Taxation Institute of Australia
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| In this Issue : |
Issue highlights:
Regular Features:
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Why you should pursue a career in tax
by Ken Davey |
 Ken Davey is a partner with the Chartered Accounting firm Davey Accounting Plus, in Launceston, Tasmania and is a State Councilor with the Tasmanian Division of the Taxation Institute. Ken has prepared the following article on why you should consider a career in tax!
A career in the taxation field in Australia is one of increasing opportunity given the manner in which the government seems intent on increasing its complexity under the guise of simplification.
A recent commentator in the recruitment industry stated that there are four accounting jobs available in Australia for every one accountant. Whilst not all accountants are experts in tax the linkages between the two areas are extremely tight. Accordingly the potential career opportunities that exist in the industry are numerous and only likely to increase in number over the coming years.
The image of the taxation advisor being likened to a bean counter could not be further from the truth with the increased complexity of the law taxation now touching virtually every person in Australia. This provides the opportunity for professionals in this area to have a huge impact on the well being of their clients. Indeed in our business of accounting and financial planning we have many clients who but for our advice would be in a much poorer position.
The extensive knowledge of the taxation advisor when combined with any of the related disciplines creates a professional who is in a unique position to not only earn a healthy salary but to do it in an environment where you know you can greatly improve your clients financial position.
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| Personal Income Tax Reform in Australia: The Way Forward |
Introduction
Personal income tax (PIT) is perhaps the most vital component of the Australian Government’s fiscal policy. It is by far the largest single source of revenue for the Commonwealth Government (or the general government sector for that matter). It has a powerful impact on resource allocation, income redistribution and macroeconomic stabilisation, and has proven to be a highly potent tool of social engineering. The PIT system in Australia directly affects more than half of the population in various capacities, while the combined PIT-transfer system affects virtually all citizens of Australia.
Like most countries in the industrialised world, Australia experienced major tax reform in the 1980s and 1990s. In the field of PIT, the former Governments’ legacy included base broadening (with the introduction of the Capital Gains Tax and Fringe Benefits Tax and removal of a number of major tax concessions in 1985), significant reduction in PIT rates, self assessment and attempts to simplify the income tax law. Although tax did take centre stage in the 1998 federal election, the A New Tax System (ANTS) and business tax reform has left the PIT-transfer system largely intact. After a relatively successful implementation of the GST in 2000, the current Government does not yet seem to possess any further ambitions for comprehensive tax reform, apart from attempting to fulfill its election tax package. In fact, some recent changes to the Australian PIT are not always easy to justify from principles of good tax policy (eg, the introduction of the CGT discount in 1999).
Such as taxpayers, tax advisers, tax administrators, etc. According to taxation statistics, 10.7 million individual taxpayers lodged returns in 2002–03 (see ATO 2005, p. 16).
In a broad sense, a transfer system can be defined to encompass social expenditure in three main functional areas of education, health and social security. In this paper, the transfer system is narrowly interpreted to mean outlays on social security, including both cash and non-cash benefits.
To read the rest of this article please click here
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| Sample Exam Question |
This sample exam question has been provided by Sunita Jogarajan, lecturer at the Faculty of Law, University of Melbourne.
SAMPLE PROBLEM
Clark is a reporter at a local newspaper. He receives a salary of $50,000 for his services.
As Clark is always away from home, he receives a meal allowance of $40 per day from the newspaper. He usually only spends about $20 of his allowance as he is on a diet and is trying to reduce the amount of food he eats.
Clark sometimes works late and in the evenings doing additional tasks for the newspaper. He is usually paid an overtime salary for this based on the number of hours worked. Last year, the newspaper had a particularly profitable year and paid all employees a bonus of $10,000 at Christmas time. In addition, Clark received an extra $2,000 (cash) as a Christmas present because he is such a nice guy.
As Clark is such a good reporter, national newspaper companies often ask him to come and work for them. However, Clark likes living in his small town and always says no. Finally, one of the national newspapers managed to get him to sign an agreement whereby he agreed that they would have first option to hire him, if he ever left the local newspaper. In return, he would be paid an amount of $5,000 each year until the newspaper chose to end the agreement.
Clark had $5,000 of allowable deductions during the year.
What is Clark’s tax payable at 30 June 2008? Assume all events take place during 1 July 2007 – 30 June 2008.
To see the solution please click here
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| Young Practitioner Profile |
 Name: Jerome Tse
Employer: Hall & Wilcox, Lawyers
Position: Senior Associate
For how Long? 3 years
What does a typical working day involve?
No one day is the same. Working in a boutique firm with a strong and highly regarded tax practice means my day’s work can vary depending on the needs of my clients.
A lot of what a tax advisor does involves meeting with clients, understanding their needs from a commercial and legal perspective and tailoring tax effective solutions to their problems. This can be in the form of negotiations with third parties, drafting non-legalistic and easy to read advice and implementing that advice by drafting the required commercial documents.
In some instances, it may even involve litigation and I have been fortunate enough to have been involved in High Court and Federal Court matters in recent times.
What has been your best achievement working in tax?
Successfully working as a tax advisor is an achievement in itself. Tax is possibly the most challenging and rewarding area of law – what other areas of law constantly change throughout the year and annually on budget night?
Why are you a member of the Taxation Institute?
The Institute is a great tax resource. The seminars and conferences run by the Institute are relevant and timely and the web site resources are always useful.
How did you get to where you are now?
I started off as a vacationer with a couple of the now Big 4 and transitioned across to the legal side of tax a few years later. I have also completed a Masters at the University of Melbourne, which has further added to my skill set.
For students considering a career in tax, the benefits in starting as an accountant or as a tax lawyer can differ. You should consider both opportunities and find the best path for you.
Where do you see yourself in 5 years?
I hope to have developed greater technical skills, become the advisor of choice to my clients and potential clients and to have moved up the ranks in the firm and the industry more generally.
Tax being the way it is, there are plenty of opportunities out there.
What is your sport of choice?
Nothing at the moment – AFL starts in 2008 (I am a Melbourne member!)
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| Reading List |
Legislation
You can find all the legislation that you require from the Austlii or ComLaw websites.
ATO Legal Database
Journals
The Treasury and Ministry Websites
Related Websites
Cases
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| Special Offers |
Various special offers from The Tax Institute's Business Alliance Partners can be accessed by clicking here
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| Feedback |
We welcome your feedback about ConTax and the receipt of proposed content contributions (i.e articles) for future editions. Click here to contact ConTax
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