Income Tax Act 1927

Legislation au C1927A00031 Not in force Act

Legislation content

 

INCOME TAX.

 

No. 31 of 1927.

An Act to impose Taxes upon Incomes.

[Assented to 22nd December, 1927.]

BE it enacted by the King’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows:—

Short title.

1. This Act may be cited as the Income Tax Act 1927.

Incorporation.

2. The Income Tax Assessment Act 1922–1927 shall be incorporated and read as one with this Act.

Imposition of income tax.

3. Income tax is imposed at the rates and amounts declared in this Act.

Rates of income tax.

4.—(1.) The rate of the income tax in respect of income from personal exertion shall be as set out in the First Schedule to this Act.


(2.) The rate of the income tax in respect of income derived from property shall be as set out in the Second Schedule to this Act.

(3.) The rates of the income tax in respect of a total taxable income derived partly from personal exertion and partly from property shall be as set out in the Third Schedule to this Act.

(4.) Notwithstanding anything contained in the last three preceding sub-sections, where a person would, apart from this sub-section, be liable to pay income tax of an amount less than Ten shillings the tax payable by that person shall be Ten shilling.

(5.) The rate of the income tax payable by a trustee shall be as set out in the Fourth Schedule to this Act.

(6.) Subject to the last preceding sub-section, the rates of the income tax payable by a company shall be as set out in the Fifth Schedule to this Act.

Additional tax.

5. In addition to the tax payable under the preceding provisions of this Act, there shall be payable, in the case of incomes in respect of which the tax is calculated under the First, Second or Third Schedules, an additional tax equal to eight per centum of the amount of the tax so calculated.

Levy of income tax.

6.—(1.) Income tax shall be levied and paid for the financial year beginning on the first day of July One thousand nine hundred and twenty-seven.

(2.) This Act shall also apply to all assessments for financial years subsequent to that beginning on the first day of July One thousand nine hundred and twenty-seven made prior to the passing of the Act for the levying and payment of the income tax for the financial year beginning on the first day of July One thousand nine hundred and twenty-eight.

 

THE SCHEDULES.

 

FIRST SCHEDULE.

Rate of Tax upon Income Derived from Personal Exertion.

For so much of the whole taxable income as does not exceed £7,600 the average rate of tax per pound sterling shall be threepence and three eight-hundredths of one penny where the taxable income is One pound sterling, and shall increase uniformly with each increase of One pound sterling of the taxable income by three eight-hundredths of one penny.

The average rate of tax per pound sterling for so much of the taxable income as does not exceed £7,600 may be calculated from the following formula:—

R = average rate of tax in pence per pound sterling.

I = taxable income in pounds sterling.

For every pound sterling of taxable income in excess of £7,600 the rate of tax shall be sixty pence.


SECOND SCHEDULE.

Rate of Tax upon Income Derived from Property.

(a) For such part of the taxable income as does not exceed £546 the average rate of tax per pound sterling shall be that given by the following formula:—

R = average rate of tax in pence per pound sterling.

I = taxable income in pounds sterling.

(b) For such part of the taxable income as exceeds £546 but does not exceed £2,000, the additional tax for each additional pound of taxable income above £546 shall increase continuously with the increase of the taxable income in a curve of the second degree in such a manner that the increase of tax for one pound increase of taxable income shall be—

11.713 pence for the pound sterling between £545 10s. and £546 10s.

12.768 pence for the pound sterling between £599 10s. and £600 10s.

14.672 pence for the pound sterling between £699 10s. and £700 10s.

16.512 pence for the pound sterling between £799 10s. and £800 10s.

18.288 pence for the pound sterling between £899 10s. and £900 10s.

20.000 pence for the pound sterling between £999 10s. and £1,000 10s.

27.600 pence for the pound sterling between £1,499 10s. and £1,500 10s.

33.600 pence for the pound sterling between £1,999 10s. and £2.000 10s.

(c) For such part of the taxable income as exceeds £2,000 but does not exceed £6,500, the additional tax for each additional pound of taxable income above £2,000 shall increase continuously with the increase of the taxable income in a curve of the third degree in such manner that the increase of tax for one pound increase of taxable income shall be—

33.600 pence for the pound sterling between £1,999 10s. and £2,000 10s.

40.000 pence for the pound sterling between £2,499 10s. and £2,500 10s.

45.300 pence for the pound sterling between £2,999 10s. and £3,000 10s.

49.600 pence for the pound sterling between £3,499 10s. and £3,500 10s.

53.000 pence for the pound sterling between £3,999 10s. and £4,000 10s.

55.600 pence for the pound sterling between £4,499 10s. and £4,500 10s.

57.500 pence for the pound sterling between £4,999 10s. and £5,000 10s.

58.800 pence for the pound sterling between £5,499 10s. and £5,500 10s.

59.600 pence for the pound sterling between £5,999 10s. and £6,000 10s.

60.000 pence for the pound sterling between £6,499 10s. and £6,500 10s.

(d) For every pound sterling of taxable income in excess of £6,500 the rate of tax shall be sixty pence.

 

THIRD SCHEDULE.

Rates of Tax in Respect of Taxable Income Derived Partly from Personal Exertion and Partly from Property.

(a) For every pound sterling of taxable income derived from personal exertion the rate of tax shall be ascertained by dividing the total amount of the tax that would be payable under the First Schedule if the total taxable income of the taxpayer were derived exclusively from personal exertion by the amount .of the total taxable income.

(b) For every pound sterling of taxable income derived from property, the rate of tax shall be ascertained by dividing the total amount of the tax that would be payable under the Second Schedule if the total taxable income of the taxpayer were derived exclusively from property by the amount of the total taxable income.


FOURTH SCHEDULE.

Rate of Tax Payable by a Trustee.

For every pound sterling of the taxable income in respect of which a Trustee is liable to be separately assessed and to pay tax, the rate of tax shall be the rate which would be payable under the First, Second or Third Schedules as the case requires if one individual were liable to be separately assessed and to pay tax on that taxable income.

 

FIFTH SCHEDULE.

Rates of Tax Payable by a Company.

(a) For every pound sterling of the taxable income of a company, the rate of tax shall be One shilling.

(b) For every pound sterling of interest paid or credited by the company to any person who is an absentee, in respect of debentures of the company, or on money lodged at interest with the company by such person, the rate of tax shall be One shilling.

 

Overview

The Income Tax Act 1927, enacted by the Commonwealth Parliament, was established to impose taxes on incomes and thereby create a dedicated revenue stream for the Commonwealth Government. The Act was introduced to address the need for a reliable and structured means of generating public revenue to support government expenditure and services. The primary policy objective was to provide a clear framework for the imposition of income tax, setting out the rates and methods for calculating and collecting taxes from individuals, trustees, and companies. This Act consolidated the Income Tax Assessment Act 1922–1927 into a single piece of legislation, ensuring consistency and coherence in the application of income tax laws.

Scope and Application

The Income Tax Act 1927 applies to all individuals, trustees, and companies within the Commonwealth of Australia, governing the imposition of income tax on incomes derived from personal exertion, property, and business activities. The Act sets forth the tax rates applicable to different income sources, as delineated in various schedules, and mandates the payment of additional tax. The Act also specifies that income tax is levied for the financial year beginning on the first day of July 1927 and applies to subsequent financial years as well. Notably, the Act incorporates the Income Tax Assessment Act 1922-1927, integrating its provisions with the current Act. Any tax payable by a person is subject to a minimum threshold of Ten shillings, and there are specific tax rates for trustees and companies, as outlined in the Fourth and Fifth Schedules respectively. The Act’s application may be extended or modified through subordinate instruments, allowing for adjustments in tax rates and other provisions as needed.

Key Provisions

The Income Tax Act 1927 (Act) establishes the framework for imposing taxes on incomes in Australia. Section 3 of the Act imposes income tax at the rates and amounts declared within the Act. The rates of income tax for income from personal exertion, income derived from property, and a combination of both are detailed in the First, Second, and Third Schedules respectively (sections 4(1)-(3)). For any income tax calculated under these provisions, an additional tax of eight percent is levied (section 5). The Act also provides a minimum tax liability of ten shillings for individuals who would otherwise be liable to pay less (section 4(4)). Trustees and companies have specific tax rates outlined in the Fourth and Fifth Schedules respectively (sections 4(5) and 4(6)). The Act imposes several obligations on the taxpayers and entities it governs. Taxpayers are required to calculate their income tax liability according to the rates and schedules outlined in the Act and pay the corresponding amount for the financial year starting on the first of July 1927 (section 6(1)). Additionally, taxpayers must account for the additional tax levied under section 5. Trustees and companies must calculate their tax liabilities according to the specific rates outlined in the Fourth and Fifth Schedules (sections 4(5) and 4(6)). The Act also mandates that taxpayers provide all necessary information and documentation to the relevant authorities to ensure accurate assessment and payment of income tax. Breach of the provisions under the Income Tax Act 1927 can lead to both civil and criminal consequences. The Act does not explicitly detail the specific offences or penalties for non-compliance. However, in general, failure to comply with tax laws in Australia can result in penalties such as fines and imprisonment. The severity of these penalties depends on the nature and extent of the non-compliance. For example, deliberately evading tax can result in substantial fines and imprisonment terms, while minor errors might incur lesser penalties. It is essential for taxpayers and entities governed by this Act to ensure full compliance to avoid these adverse consequences.

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Taxation Law
Instrument
Act
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Definitions & Interpretation
Offence Provisions
Levy of income tax
Rates of income tax

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.