Overview

Income tax law in Australia is governed by the Income Tax Assessment Act (1936) and the Income Tax Assessment Act (1997) (together called the ‘ITAA’) as well as case law and interpretive materials such as taxation rulings and determinations issued by the Commissioner of Taxation. The tax law in Australia is federal law administered and enforced by the Australian Tax Office (ATO).

As an individual who earns an income in Australia you are responsible for ensuring that you understand your tax obligations. Each year you must file an income tax return and pay tax according to Australian taxation law rules.

This guide covers the income tax laws applicable to resident individuals in Australia. It provides a general summary of where legal assistance from a tax lawyer may be useful. Individuals should seek specific tax advice to confirm their situation.

If you are an individual taxpayer operating a business there will be additional tax obligations in relation to business income that need to be considered separately. Taxation of non-residents is also not covered in any detail in this guide. See the other topics in our Tax & Superannuation area for more information.

This Legal Guide on Income Tax Law provides private individuals with general information about the relevant areas of Australian tax law. Before making important decisions it is advisable to obtain legal advice specific to your situation. LegalEagle’s™ free directory profiles all lawyers in Australia. You can use it to Find a Lawyer near you.

Please select from our Articles, FAQ and Questions & Answers sections all written by experienced lawyers. Our Glossary helps explain the meaning of any words you are unsure about. You can also Ask a Lawyer a question yourself. It is free and anonymous.

Warning: Information provided through LegalEagle™ is for general guidance. It is not legal advice. Laws and procedures referred to may change and differ between states, territories and nationally. There may also be important exceptions or qualifications. Only a lawyer providing formal legal advice can assess your particular circumstances to determine how the law will apply.

How a Lawyer Can Help

A lawyer can help you manage your compliance obligations under Australian taxation law. For individuals with simple tax affairs such as a salary and some basic interest income there may be no benefit in involving a tax lawyer. This depends on your particular situation. A tax lawyer is usually of the most assistance when there are more complex tax issues involved. For example seeking tax advice may be appropriate when:

• you are involved in contract negotiations;
• you have multiple streams of income;
• you have a family owned businesses that employs and pays a salary to family members;
• you have been given a distribution from a family trust; or
• you need to set up and maintain assets such as real property or investments in a tax effective manner.

Tax compliance can also be more complicated when there are multiple sources of income such as investment income, foreign income or trust distributions. A tax lawyer can:

• provide advice on how to minimise tax on your combined income streams;
• review your tax affairs to ensure that all tax compliance obligations are satisfied;
• highlight the potential pitfalls and common problems associated with multiple income streams; and
• advise you about structuring your finances, debts and investments in ways that are tax effective.

Tax planning opportunities are constantly changing. The opportunities will vary depending on your particular circumstances. Seeking tax advice and making sure you understand what is appropriate can assist you to identify the opportunities and avoid negative consequences such as:

• penalties;
• additional tax;
• interest; and
• the risk of criminal prosecution in circumstances where there is tax evasion or fraud.

A tax lawyer can also represent you in dealings with the Australian Taxation Office (ATO) by:

• liaising with the ATO to resolve any disputes over your taxation liability;
• representing you in any dispute hearings with the ATO;
• developing and presenting the correct legal arguments to defend any charges or penalties laid against you; and
• preparing you for litigation in the event this is required.

If you are concerned that your circumstances place you in an unusual or novel taxation situation you can apply for a private ruling from the tax office. A tax professional or lawyer can assist you with an application for a tax ruling and provide advice on whether this is a suitable choice in your circumstances.