Studying Tax Law – Researching & Writing

Key databases:

Legislation: ComLaw (Principal and Amending plus Bills), AustLII, ATO Legal Database, and Subscription databases (CCH and CheckPoint).

Cases: High Court of Australia, Federal Court of Australia, Official published via Westlaw (CLR and FCR), AustLII (includes AAT), and tax cases specifically with headnotes (CCH and Checkpoint).

Rulings: ATO Legal Database, Public rulings (TRs and TDs), Private rulings (ATO IDs) and Guidelines and practice statements.

The research will also be assisted by accessing published reports and journal articles.

Legal Research Exercise:

Division 7A of Part III of the Income Tax Assessment Act 1936 sets out rules which (amongst other things) will sometimes treat loans and other payments made to a shareholder as a dividend in the shareholder’s hands, and therefore taxable to the shareholder/borrower. One circumstance which triggers this rule is set out in s 109E. It operates where the owner has borrowed money from a private company in an earlier year but has failed to repay by the end of the current year at least the ‘minimum yearly repayment’.

When Division 7A was first enacted in 1997, the consequence for failing to pay the required minimum amount was the whole of the loan originally made was assessable as a dividend. Today the consequence for failing to pay the required minimum amount is that only the amount of the shortfall (the difference between what was paid and the required minimum) is assessable as a dividend. 

Answering a tax law problem

A simple way to break down the facts presented is the IRAC method:

I: issue – Identity the issue/s raised by the facts presented. Make sure you are addressing the question that is being asked.

R: rule – What is the rule, the relevant law. The legislation will be the starting point but in many instances, cases will also be relevant.

A: application/Analysis – Apply the law to the facts presented in the question. Make sure to consider reasonable alternatives.

C: conclusion – What conclusion would you draw from your analysis.

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