taxation law assignment help

taxation law assignment help

Taxation Law and Its Impact on Individuals and Businesses

1. Introduction to Taxation Law

Taxation law, also called revenue law, is a complex area of legal practice that focuses primarily on the various legal standards and procedures governing federal, state, and local taxation at several levels. Trying to define taxation law precisely is quite impossible since it belongs to several legal areas and the development of these rules defines its borders. As a result, it becomes quite intricate to define the framework that delineates the required components of a tax system and the theories which allow taxation and legal norms to coexist. Taxation law signifies the legal infrastructure within the political system. It lays the foundation for the governmental machinery and in many ways, it constitutes the self-imposed restraints of the legislative, executive, and judicial power to provide a just legal mechanism for tax collection. As a matter of political reality in Australia, no one can understand tax laws if he or she knows just one thing about taxes. Because taxation law is part constitutional law, part contract law, part statutory law, part administrative law, part superannuation law, and part the overlay of public and private international law. Ergo, there should be a good understanding of both the fundamental principles of the taxation law along with the changes in this quite rapidly changing area of law, which needs detailed analysis of current authorities.

2. Key Principles of Taxation Law

For the vast majority of taxes imposed, the liability to pay is calculated by reference to the yearly taxable amount of the particular tax. However, there are exceptions to this, such as where stamp duty is imposed on particular transactions or periods of time. Stamp duty is the tax on certain transactions and documents.

In terms of payment, tax obligations are generally imposed on a yearly basis. In the case of income tax, this takes the form of an assessment issued by the Australian Taxation Office once the taxpayer submits their annual income tax return. The return is generally lodged at the end of the income year (being the 30 June) and it covers the income received during that year. For a person who has earned a significant amount of interest throughout the income year which has not been subjected to pay as you go withholding tax, they might also have to pay provisional tax in the form of quarterly instalments.

In Australia, different types of taxes exist including: income tax, which is the most significant form of taxation for the federal government; consumption taxes such as the goods and services tax; and taxation imposed on transactions and wealth such as stamp duties and capital gains tax. However, in addition to the income tax – which is reviewed annually by the Commonwealth government, these other types of taxation require specific legislation in order to become law.

Taxation laws are the legal rules and procedures governing how taxes are imposed. The key principles that underpin the taxation laws in Australia are largely consistent with the fundamental principles underlying the English common law system. These are the principles of: legality – which means there must be a legal foundation for taxation, and only the Commonwealth Parliament in Australia and the state or territory parliaments have the power to impose a tax; fairness – which requires that the process by which laws are made must be fair and that the laws themselves must be fair in their content; and compliance with the law – which means not only complying with the legal obligations imposed under taxation laws, but also complying with the way in which those legal rules are made and exercised.

3. Taxation Law and Its Implications for Individuals

Taxation law can have significant implications for an individual and commercial businesses. Firstly, it is important to understand who qualifies for taxation. An individual is subject to taxation if that person earns above a certain bracket. This means that everyone in employment is subject to taxation and must have a valid tax reference. Sole traders and partners in a business are also taxed as individuals; their profits are charged to income tax in their hands. Limited companies are classed as separate legal entities and as such are criminally responsible for their tax affairs. But taxation law does not stop at just defining who is taxed and the processes in place for paying. There are many pieces of legislation in place to ensure that the correct amount of tax is paid and by a legally binding tax return. For example, there is the “principle of specific legislation” which means that if you are claiming a relief, there must be a specific piece of legislation allowing that relief. There is also the “principle of transparency” which means that when you submit a tax return, you must give all the information necessary so that Her Majesty’s Revenue and Customs can check your declaration. These rules are designed to create a fair and just system but can mean that a lot of legal and technical jargon is present within the taxation system which can confuse a person without strong legal knowledge. Also, in the modern age there is increasing reliance on technology, from online returns to electronic tax calculations and this constant evolution of taxation law means that advising individuals and businesses is becoming a sophisticated and intricate process.

4. Taxation Law and Its Implications for Businesses

Taxation law has important implications for any business. Taxation law and its implications for businesses. The most basic implication, whether the business is a sole proprietorship or a corporation, is that profits are taxable. So whatever financial benefit a business entity is able to generate, whether from activity generated in the business or, in many cases, from the increasing value of business assets, tax will be due. This is true of both the traditional corporate structure and the growing enterprise culture within a limited liability corporation. All profits generated by the business have to be carefully tracked and assigned to the various tax entities or elements; there are several different taxes which may be due but they all are based on profit; and there are complex rules which can apply to businesses which make large profits one year and significant losses in the following year. For the most part, sole proprietorships are able to decide their own financial year end date and that can have implications for the amount of tax due. But where a sole trader, for instance, has yearly turnover in excess of the value added tax (currently £60,000) there are a complex series of financial and accounting standards and rules with which the business owner must comply. Also, the business entity itself may be at risk of criminal prosecution under the tax laws if, for example, employment taxes are deducted from the wages of employees but not actually paid to HM Revenue and Customs. The criminal acts of “cheating the public revenue” and, in the case of certain tax knowledge parties who assist or induce another person’s fraud, “being knowingly concerned in the fraudulent evasion of tax” are chargeable under the common law. This could lead to severe penalties such as a lengthy prison sentence and not just the confiscation of all business assets and the profits generated but also the confiscation of any personal assets as well. On the other hand, a limited company is a legal entity in its own right and is responsible, therefore, for its own tax on profits. This is in contrast to the sole trader who is taxed in line with national and local government personal income tax regulations. Also, a limited company must pay nine months and one day after the end of its accounting period; there are severe financial penalties for the late payment of corporation tax and those apply even if the company chooses to file its tax return and pay the tax earlier. Finally, the sort of business that is being done can be relevant to what sort of tax may be due. For example, energy-using businesses may qualify for tax relief under the Climate Change Agreements Programme. This was introduced following the Kyoto Agreement of 1997 and it is a programme whereby businesses or business sectors of any size can voluntarily commit; in return, those businesses or business sectors are given tax relief by the government for reducing the level of carbon dioxide produced or the level of energy used. The economic result, in many cases, has been that businesses have grown and become more profitable through investment in advancing technologies, in energy management and control systems and other equipment that can be used to reduce energy usage.

5. Conclusion: The Importance of Compliance with Taxation Law

The importance of compliance with taxation law cannot be overstated. As I have discussed in this essay, taxation law is crucial for all entities in a given state. It is important for individuals, businesses, and even the government itself. The taxation system may look similar in most of the states, but it is just the surface as there are a lot of differences in the laws and regulations of taxation in each country. Because of this, it is important to consult with a professional of a relevant field such as a financial advisor, tax consultant, or attorney. By ensuring that you are always in compliance with the most up-to-date tax laws, you can save yourself both time and money in the future. This can avoid unwanted liability for paying extra tax, penalties, or going through the long and exhaustive tax dispute process where the taxpayers and the tax authority create a relationship full of conflict and distrust. It is beneficial to both individuals and businesses to properly understand and comply with the taxation law as the government will require the income from tax to fund public services and they may use the tax incentives to encourage business activities and economic growth. However, penalties for failing to comply with the tax law can be significant, so it is very much important for individuals and businesses to seek professional advice. As we have seen in some cases, such as Google’s tax dispute with the Tax Authority of Indonesia where Google was accused of avoiding tax on millions of dollars of advertising revenue in Indonesia by insisting that the law does not require companies without a business presence in the country to pay tax on such revenue. The tax officers had made a police report and Google faced a criminal investigation. Such complex disputes and the financial risk which may occur during investigation can be avoided if the company concerned has an effective and proactive system of compliance with the tax regulation. Google has since faced tax legal challenges from several other countries including tax authorities in the UK and Spain, and finally agreed to pay Indonesia a back tax of more than $42 million. By making sure that you are in compliance with the law and also using tax incentives for your benefits, one day it could be your company or you will succeed for such incentives. However, it is wrong to do so by breaking the taxation law. Compliance with the tax laws is important because it makes sure the economy and the public services such as hospitals and schools are all running well. Every government needs money to fund their public services and when we all contribute by paying our taxes, we will all benefit in the end.