In: Accounting
Describe the distinction between legislative requirements and professional standards (including ethical standards). 180–200 words( In context of Australia )
What part of the legislation provides details of how much income tax must be paid and what does it state? 100–120 words
Describe some of the potential consequences of failing to submit an income tax return on time. 80–100 words
How do tax offsets differ from tax deductions and why are they used? 180–200 words
1.Distinguish between legislative requirements and professional standards:
Legislative requirements are some set of rules regulations framed by the public authorities and are mandatory for the execution. To implement and enforce legislation these requirements are used. Professional standards are the standards which are framed to maintain quality of services provided by the professionals. Professional standards serve as guidelines which explains how to carry out the duties performed by the professionals. Ethical standards are the code of ethics which are to be maintained mandatorily while performing the duties. These includes the do's and don'ts of duties performed by the professionals.
When legislative requirements are not followed it refers to outbreak of rules and regulations and are punishable. In the same way when ethical standards are not maintained, it is a punishable offence.
2. Income Tax Act of the legislation provides details of how much income tax must be paid and it states that every person whose total taxable income is more than the specified limit prescribed by in the act must pay tax to the government. It is the responsibility of every person whose total taxable income is more than the specified limit to pay tax to the government.
If any person fails to pay tax or paying less tax by showing lower income, it is not justifiable because it is loss to the government. Government generates revenue in the form of taxes being paid to them. Therefore the amount of tax to be paid will be determined by the Income tax act.
3. Some of the potential consequences of failing to submit an income tax return on time:
4 . Tax offsets differ from tax deductions in the following manner explained
Tax offsets are not as same as tax deductions. Tax offsets directly reduces the tax amount irrespective of the taxable income. While tax deductions reduces the amount of taxable income to some extent with respect to the sections of the income tax act. Therefore Tax offset is different from tax deduction.
Tax offsets are used to reduce tax amount of the current year with the losses carry forward from the previous years. Tax deductions are used to reduce the amount of taxable income in some ways for instance medical expenses paid during the year, medical insurance, making deposits, school fees paid for the children, etc.
The tax offsets and tax deductions are used to reduce the amount of tax payable for the current year because nobody wants to pay more tax out of their pockets. To reduce the amount of tax in the current year these two tax offsets and tax deductions are helpful in minimising the tax.