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Commonwealth act
This Act has been repealed and is no longer in force. It is retained for historical reference.
What this law does, in plain terms
Who it affects and who decides
Who pays: the Act makes any “person” liable who is chargeable with income tax; this definition expressly includes companies, trustees, partners and agents acting in representative capacities (s.3; ss.16, 24–27, 52). Special rules make agents and company public officers responsible for compliance in particular circumstances (ss.15, 22, 51, 52).
Who decides and administers: the Commissioner of Taxation has general administration of the Act, broad powers to require returns, examine books, delegate functions and make discretionary decisions about extensions, remissions and approvals (ss.5–7, 8, 42–43, 55–56, 59). The Commissioner must report certain actions to the Treasurer (ss.8, 16(3), 43, 59, 64).
Core mechanics: taxable income, exemptions and deductions
Tax base: income taxable is the taxpayer’s "taxable income" derived from sources in Australia during the relevant twelve‑month period (s.10). The Act gives specific definitions of income (including business profits, dividends, interest, allowances, trust interests, certain notional imputations such as 5% of the capital value of owner‑occupied land) (s.14).
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Direct links to the current provisions in Income Tax Assessment Act 1915.
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View on official registerSourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.
Exemptions: certain public, charitable, provident and war‑loan incomes and specified official salaries are exempt (s.11), but the Act limits those exemptions so that income paid out of an exempt fund (for example, salaries paid by an exempt body) is not itself exempt (s.12).
Deductions: the Act permits deductions for losses and outgoings incurred in producing income (including travelling, interest, repairs, depreciation subject to averaging or Commissioner approval), specified small allowances, superannuation and some wartime contributions (s.18). It also provides a personal‑exemption style schedule for individuals (s.19). The Act lists matters explicitly non‑deductible (s.20).
Assessment, returns and appeals
Returns and assessments: taxpayers above a threshold must furnish returns when required by notice (s.28). The Commissioner may require further returns, make assessments from returns or other information and may make assessments where a taxpayer defaults or returns are unsatisfactory (ss.29–33). Validity of assessments is protected against procedural defects (s.34).
Objections and appeals: a taxpayer may object to an assessment to the Commissioner and may then have the objection treated as an appeal to a court (High Court, a State Supreme Court, or other specified court) within prescribed time limits; an appeal may be heard and finalised by the court and, in some cases, further appealed to the High Court (ss.37–39). Pending appeals do not suspend collection (s.39).
Collection, enforcement and remedies
Payment timing and enforcement: tax is due thirty days after service of notice of assessment (s.41). The Commissioner can extend time or allow instalments (s.42). Unpaid tax becomes a debt to the Crown recoverable in court (s.44); additional tax penalties apply for late payment (s.43).
Specific enforcement levers: the Act allows substituted service when a taxpayer cannot be found (s.45); the Commissioner may pursue executors/administrators for taxpayers who escaped full taxation in life and can treble assessments where default was intentional (s.46); there is no statute of limitations on tax recovery (s.47). The Commissioner may also recover from third parties in limited circumstances (for example, lessees who owe rent) and permits contributors or agents who pay on another’s behalf to seek reimbursement (ss.48–50).
Powers, compliance burden and discretion: testing the mechanics against costs and incentives
Administrative discretion: the Commissioner has multiple broad discretionary powers (to delegate, to require further returns, to accept non‑standard year ends, to remit penalties, to approve funds for depreciation or pension arrangements, and to extend payment terms) (ss.7, 29, 31, 18(e), 42, 43, 59). That discretion concentrates decision‑making in the Commissioner’s office and creates implementation reliance on administrative choices (see ss.7, 42–43, 59).
Compliance burdens on taxpayers: the Act requires returns on notice (s.28), permits the Commissioner to demand further written or oral evidence and production of books (ss.29, 56), authorises access to premises and records (s.55), and imposes criminal and monetary penalties for false returns, obstruction, non‑attendance and understatement (ss.57–61). These provisions create record‑keeping, disclosure and procedural obligations for taxpayers and their agents (ss.28, 55–56, 58–61).
Who bears costs and what incentives change: taxpayers bear the direct tax and the administrative cost of compliance (filing returns, producing documents) (s.28; ss.55–56). Agents, public officers of companies and trustees can be made personally liable for compliance failures or for withholding funds (ss.51, 52(f)), which creates incentives on those representatives to retain funds and ensure taxpayer compliance. The Act also allows recovery of tax from third parties in limited settings (e.g., lessees) (s.48), shifting some collection burden onto payers in particular transactional settings.
Anti‑avoidance and enforceability: the Act voids contracts made to alter tax incidence or evade the Act (s.53) and imposes criminal penalties for deliberate understatement or evasion (ss.60–61). These provisions increase legal and enforcement risk for arrangements that attempt to reallocate tax burden.
Industry‑specific rules and targeted measures
Implementation risks, trade‑offs and likely behaviours
Trade‑offs: the Act balances a broad taxable base with enumerated deductions and exemptions. It centralises assessment power with the Commissioner (ss.5, 31–33) while providing judicial review via appeal (ss.37–39). That structure can speed collection but places heavy reliance on administrative accuracy and on taxpayers’ capacity to comply.
Potential behavioural effects: the Act creates incentives for taxpayers to keep complete records, to respond to Commissioner requests, to appoint and supervise public officers or agents, and to prefer transparent distributions where companies might otherwise retain income (see ss.16(2) on deemed distribution). The anti‑avoidance clause (s.53) and criminal penalties (ss.60–61) discourage deliberate understatement and tax‑shifting arrangements.
What to watch in practice (implementation signals from the text)
Concentrated decision points: many substantive choices (remitting penalties, allowing depreciation funds, approving company charging of tax to beneficiaries, assessing undistributed company profits to shareholders) rest with the Commissioner (ss.16(1) proviso, 18(e) proviso, 42–43, 59). These points create discretionary administrative workloads and the need for published criteria or records (the Act requires some reporting to Parliament—see ss.8, 16(3), 43, 59, 64).
Compliance and enforcement intensity: the law authorises access to premises and documents (s.55), compelled testimony on oath (s.56), criminal penalties and monetary fines (ss.58–63), and no time bar on collection (s.47), indicating a legal regime oriented to active enforcement.
Key sections to read first: s.10 (tax imposed), s.14 (what counts as income), ss.18–20 (deductions and non‑deductions), ss.28–36 (returns and assessments), ss.37–39 (objections and appeals), ss.41–49 (payment and recovery), s.53 (anti‑avoidance).