ATO and administration
Legislation
Legislation is the written law made by Parliament, such as Acts and the regulations under them, which sets out who pays tax, how much, and what the Australian Taxation Office can and cannot do.
Legislation means the laws passed by Parliament, together with the more detailed rules made under those laws. In Australian tax, the central pieces are Acts of the Commonwealth Parliament, and below them sit regulations and other legislative instruments made under the authority of an Act. Together they create the rights and obligations that apply to taxpayers and give the Australian Taxation Office its powers.
The main tax Acts have distinct jobs. The A New Tax System (Goods and Services Tax) Act 1999 creates and governs GST. The Income Tax Assessment Acts deal with income tax. The Taxation Administration Act sets out many of the procedures for lodgment, payment, record keeping, penalties and interest. Superannuation, fringe benefits tax and other areas each have their own legislation. A single business can be affected by several of these Acts at once.
Legislation is different from the guidance the ATO publishes. Public rulings, determinations, practical compliance guidelines and website explanations are the ATO's view of how the law works and how it will approach compliance. Guidance can be very useful and, in some cases, relying on it can protect you from penalties, but it is not itself the law. If guidance and the Act ever conflict, the Act prevails.
Legislation also changes. Parliament amends tax law regularly, so thresholds, rates, concessions and deadlines can move from one year to the next. That is why a published figure for something like an asset write-off limit, a contribution cap or a tax bracket should always be checked against the current position on the ATO website rather than relied on from memory or from an older article.
For GST in particular, the legislation defines terms that are used in everyday speech more loosely, such as supply, enterprise, consideration and creditable acquisition. Whether you must register, charge GST on a sale or claim a credit depends on how these legal definitions apply to your facts. Two transactions that look similar commercially can be treated differently because of the way the Act defines them.
A common misunderstanding is assuming a rule applies because a competitor or friend does it, or because an online forum says so. Another is treating a proposed change reported in the news as law. A measure is only enforceable once it has been passed by Parliament and has received assent. If your position depends on a technical reading of the law, it is sensible to read the relevant provision, check any related ATO guidance and consider professional help. This is general information only, so confirm how legislation applies to you with the ATO or a registered tax professional.
Worked example
Mark runs a small online shop and hears that a new tax concession will let him write off equipment purchases. Before buying a $4,400 GST-inclusive printer, he checks whether the measure has actually passed Parliament and what the conditions are. He finds the ATO page for the current rules and confirms he qualifies. The GST credit on the printer is $4,400 divided by 11, which is $400.
Practical tips
- Treat news about proposed tax changes as proposals until they are actually legislated. Check the ATO website for what currently applies.
- Remember that ATO guidance is not the law itself. It can help protect you, but the Act is the final authority.
- Note the date of any article you read, since figures and rules can change from year to year.