A REVIEW OF JUDICIAL REFERENCES TO THE DICTUM OF JORDAN CJ, EXPRESSED IN SCOTT V COMMISSIONER OF TAXATION, IN ELABORATING THE MEANING OF ‘INCOME’ FOR THE PURPOSES OF THE AUSTRALIAN INCOME TAX By Mark Burton
Judicial consideration of the meaning of ‘income’ (ITAA1936) and ‘ordinary income’(ITAA1997) includes reference to a dictum of Jordan CJ describing a process for discovering the meaning of ‘income’ for the purposes of the then New South Wales income tax. Over the past eighty years the import of this dictum has been described in various ways in case decisions. This paper identifies these different judicial descriptions of the dictum’s meaning and considers the significance of this diversity when describing the process by which the meaning of ‘ordinary income’ ought to be ascertained.
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A frequent claim in popular media is that the wealthy pay the most tax. As an absolute measure of tax collected this is correct, as the rich earn the most income. However, perhaps a more insightful perspective is a relative measure incorporating not only who pays the most income tax, but a measure that incorporates other taxes such as indirect taxes and duties.
Indirect taxes and duties collect over one-third of tax revenue in New Zealand and present as a not insignificant tax burden, particularly for lower income taxpayers. This study has three objectives. First it provides an insight into indirect taxes and duties paid by decile group in New Zealand in order to highlight the impact of non-income taxes on different income groups. Second, it challenges the rhetoric associated with claims that no groups would be disadvantaged by the last income and consumption tax changes made in New Zealand. Third, it argues that there is a need for greater transparency on the impact of tax changes and, in particular, there is a role for the government agency responsible for collecting statistical information to engage in more analysis of tax data when that data is not readily accessible for academics.