Answer To: ASSESSMENT GUIDE FNSACC601 Prepare and administer tax documentation for legal entities ASSESSMENT...
Tanmoy answered on Oct 07 2021
FNSACC603 implement tax plans and evaluate tax obligations
1. Report
Q1. Ethical consideration in the time of preparation of the tax documentation for legal entities under different elements
There are numerous ethical considerations, and legislative requirements for tax documentation required for the legal entity which are as follows:
1. The ethical consideration under the conflict of interest is CPA does not work together for the clients when there is a real or probable conflict of interest among the two clients.
2. For confidentiality, no information should be disclosed without the proper approval of the client to a third party except there is any legal compulsion to reveal the information.
3. Government tax policy document should be accurately considered by the accountant during preparation of tax documentation for entities in order to have elevated and updated information about the existing tax policies.
4. Legislation explanation materials must be used by the taxation agent or accountant to comprehend the importance for each of the tax legislation in preparation of the tax documents of the entities and to understand the scope and the amount of these legislations.
5. Statutes in instance of tax documentation have high importance as the accountant has ethical consideration of appropriately interpreting and using diverse tax legislation to evaluate the tax requirement of the legal entity precisely.
6. Administrative Appeals Tribunal (AAT) circulates every judgment with appropriate reasons of why the judgment has been taken to augment the reliance and assurance of the ordinary residents in the running of the AAT (Administrative Appeals Tribunal | Administrative Appeals Tribunal, 2019).
7. Commissioner of taxations authorize to devise the binding ruling and for this reason, if the client is relying on the verdict of the commissioner, then he or she should not be penalised for this, even in a situation where the judgment has been against the client. The ruling in diverse areas in the taxation is taken by the commissioners like GSTR, Income Tax Ruling and many other areas like these. Some of the ruling which includes the purpose of tax law to an exacting client case and this ruling are private ruling which is informed to the community afterwards, and these ruling should be taken into concern in the instance of client tax documents.
Q2. Explain the critical and key elements of Australian taxation law for each of the following areas, as it relates to tax documentation for legal entities
There are some key principles of the Australian taxation law, and these principles will be discussed here. The first principle of Australian taxation law is accountable for management and oversight. Under this principle, the roles and responsibilities of the taxation administrations are defined with clarity in Australian tax law. The second principle is recognition of tax risk, and under this principle, the proper control system is in place to minimise the effects of any tax risk. The third principle is to seek advice, and under this principle, there is a proper system in place to help the individuals seeking advice on different taxation issue. The fourth principle is integrity in reporting, and this stated that tax reporting should show an accurate view of the business. The fifth principle is timely lodgement and payments, and under this principle, it is stated that the tax obligation should be paid in time and in full amount. The sixth and seventh principle is an ethical and professional and productive working relationship.
The isolation of power in the Australian tax system will have been divided into three parts, and they are legislative, executive and judicial (The separation of powers | ALRC, 2019). The legal system in the Australian tax system includes the Australian government giving power to the Commonwealth to impose different taxation rules and regulation.
According to the Australian tax system, the Australian residents are taxed from the entire income earned from different sources worldwide and the foreign residents are taxed only on the income earned from different sources in the Australian sources.
Some of the elements of the international tax related to the international tax in Australian tax are the Australian citizens has to pay for tax for all their income from different sources even those which are outside Australia, but the foreigner only has to pay tax on the income earned from Australian market sources. The assessable income for the Australian residents starts from $18200 and the assessable income for the foreign residents starts from $1 at a rate of 32.5% (International tax for individuals, 2019). The Deductions, tax rebates and offsets in Australian income tax include deduction or offset due to different reasons and elements, and some of them are health insurance, low-income earners, senior citizens, medical expenses, super income, government benefits and many more elements like these. The tax accounting in the Australian tax system is mainly done by two different methods, and they are accrual basis and cash basis.
Some of the key features and standard of Capital Gains Tax (CGT) is that it is not applied to the majority of personal assets of an individual exclusive of home car and furniture. Another key feature is CGT does not apply to the depreciating assets which are used for taxable use like machinery. The individuals have to pay the same tax rate under CGT as income tax rate which he pays. Some of the key aspects and principles of fringe benefits tax are that the employee pays it for providing certain benefits to its employees and it does not apply to certain benefits like salaries, super funds, benefits to the volunteers and contractors. The FBT tax rate is 47% (Fringe benefits tax (FBT), 2019).
Some of the important elements of Goods and Service Tax (GST) will be discussed here. The first element is that the tax rate under it is 10%. The second element under GST is business with a minimum turnover of $75000 has to register under it. For getting fuel tax credit under it, the business has to register under it (Goods and services tax (GST), 2019).
The taxation aspects of superannuation law are that the investment income which comes from the assets sustaining the pension is exempt from the superannuation tax, but all other investment funds from a superannuation fund are taxed usually at 15%.
Some of the special aspects of the diverse taxes recognized above will be discussed here. The first aspects are documentation. Under this, the individuals and corporations who are taxable under Australian tax have to send duplicate supporting documents of diverse elements of Taxable income to ATO resembling salary, deductions, offsets, medical levy exemptions and many other aspects like these (Supporting documentation, 2019).
The individuals earning salaries and wages mainly are taxed for earnings by Pay as you go withholding system where the employer directly deducts the tax expense from the salary of the employee. ATO send the individuals the notice about the itemised description of the total of tax that an individual owes to the authorities with respect to the taxable income. Some of the tax obligations in the Australian tax system are employing people in Australia, capital gains, withholding tax on the payment made to the foreigners and Goods and Service Tax. There are two types of declarations in Australia which are private and public rulings. There are a few circumstances in which ATO charged penalties towards different individuals and entities. These conditions are by making false statements, failure to submit return appropriately, not withholding the sum obligatory as per the PAYG system and not pleasing the entire tax obligations. The tax auditing is done by ATO on a haphazard basis.
Few anti-avoidance rules are in place in the Australian tax system. The Specific Anti-Avoidance Rules look into the transactions from different aspect to see whether any rules or regulation are wrongfully taken advantage of to pay less tax by the individuals and entities. General Anti-Avoidance Rules are applied on transactions which do not fall under Specific Anti-Avoidance Rules and examines under Part IVA of the ITAA 1936 contained rules (tticdn.blob.core.windows.net, 2019).
Q3. Describe the following key sources of information and taxable transactions data that is required to calculate taxable income
Some of the sources of information and assessable transaction information of allowable deductions in the Australian tax system are depreciation of assets, repair and maintenance, capital expenses and numerous other sources like these.
Several sources of information and taxable transaction data of capital gains are...