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100+ Free CPA Australia Taxation Practice Questions
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A company makes a tax loss in one year. Subject to the company loss recoupment rules, that loss can generally be:
A
B
C
D
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2026 Statistics
Key Facts: CPA Australia Taxation Exam
6
Official Modules
CPA Australia Subject Outline
25%
Largest Module (Taxable Income)
CPA Australia Subject Outline
Open book
Exam Conditions
CPA Australia
10%
GST Rate
Australian Taxation Office
47%
FBT Rate
Australian Taxation Office
~15 hrs/wk
Recommended Study
CPA Australia
CPA Australia's Australia Taxation subject is a foundation-level elective covering Australian income tax, CGT, GST and FBT. The exam is open-book and computer-based, combining multiple-choice and extended-response questions. The official subject is built around six modules with set exam weightings: Legal, ethical and regulatory fundamentals (15%), Principles of taxable income (25%), CGT fundamentals (15%), Taxation of individuals (15%), Taxation of various entity types (15%), and GST and FBT fundamentals (15%). CPA Australia does not publish a fixed question count or pass mark and suggests about 15 hours of study per week across the semester.
Sample CPA Australia Taxation Practice Questions
Try these sample questions to test your CPA Australia Taxation exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.
1Which Act is the primary source of Australia's general capital gains tax (CGT) rules and most current income tax provisions, having progressively rewritten the earlier 1936 legislation?
A.Income Tax Assessment Act 1997 (ITAA 1997)
B.Income Tax Assessment Act 1936 (ITAA 1936)
C.Taxation Administration Act 1953 (TAA 1953)
D.A New Tax System (Goods and Services Tax) Act 1999
Explanation: The ITAA 1997 is the rewritten, principles-based Act that now contains the core income tax and CGT provisions (e.g. s 6-5 assessable income, Part 3-1 CGT). The ITAA 1936 still operates for some specific regimes but the 1997 Act is the primary modern source.
2Under s 6-5 of the ITAA 1997, an Australian resident is assessable on ordinary income derived from which sources?
A.Only sources within Australia
B.All sources, whether in or out of Australia
C.Only sources outside Australia
D.Only sources within the resident's State of residence
Explanation: Section 6-5(2) provides that a resident's assessable income includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia. This is the residence-based 'worldwide income' principle. Foreign residents (s 6-5(3)) are assessed only on Australian-sourced ordinary income.
3The Commissioner of Taxation issues a public ruling setting out how the Commissioner will apply a tax law. What is the status of a public ruling on which a taxpayer relies?
A.It is law and binds the courts
B.It is merely a guideline with no legal effect
C.It binds the Commissioner in the taxpayer's favour if the taxpayer relies on it
D.It binds the taxpayer but not the Commissioner
Explanation: Public and private rulings are administratively binding on the Commissioner. If a taxpayer relies on a ruling that applies to them, the Commissioner cannot assess on a less favourable basis, even if the ruling is later found to be wrong in law. Rulings do not bind courts or override the legislation itself.
4A tax agent prepares a client's return knowing the client has deliberately omitted cash income. Under the Code of Professional Conduct in the Tax Agent Services Act 2009 (TASA), the agent's primary obligation is to:
A.Lodge the return as instructed because the client is responsible for its content
B.Report the client to the police immediately
C.Charge a higher fee to reflect the increased risk
D.Act honestly and with integrity, and not knowingly make a false or misleading statement to the ATO
Explanation: The TASA Code requires registered tax agents to act honestly and with integrity and not to make statements to the ATO that they know, or ought to know, are false or misleading. Knowingly lodging a return that omits income would breach the Code and may attract sanctions from the Tax Practitioners Board.
5Which body is responsible for the registration and regulation of tax agents and BAS agents in Australia?
A.The Tax Practitioners Board (TPB)
B.The Australian Securities and Investments Commission (ASIC)
C.The Australian Taxation Office (ATO)
D.CPA Australia
Explanation: The Tax Practitioners Board administers the Tax Agent Services Act 2009, registering tax and BAS agents, maintaining the Code of Professional Conduct, and imposing sanctions for breaches. The ATO administers tax law generally but does not register agents; ASIC and CPA Australia have different remits.
6An individual spends 100 days in Australia during the income year but argues they are a non-resident. Which of the following is one of the statutory residency tests in the ITAA 1936 definition of 'resident'?
A.The 90-day visa test
B.The 183-day test
C.The 6-month employment contract test
D.The permanent home abroad test only
Explanation: The s 6(1) ITAA 1936 definition includes the 183-day test: a person present in Australia for more than half the income year is a resident unless the Commissioner is satisfied their usual place of abode is outside Australia and they do not intend to take up residence. The other statutory tests are the ordinary concepts (resides) test, the domicile test, and the Commonwealth superannuation test.
7Which institution has the constitutional power to make laws with respect to taxation in Australia, subject to the requirement that such laws do not discriminate between States?
A.State parliaments
B.Local councils
C.The Commonwealth Parliament
D.The High Court of Australia
Explanation: Section 51(ii) of the Australian Constitution gives the Commonwealth Parliament power to make laws with respect to taxation, provided it does not discriminate between States or parts of States. Income tax, FBT and GST are all Commonwealth taxes. The High Court interprets, but does not make, tax law.
8Part IVA of the ITAA 1936 is best described as:
A.The general capital gains tax regime
B.The fringe benefits tax charging provision
C.The PAYG withholding regime
D.The general anti-avoidance rule allowing the Commissioner to cancel a tax benefit from a scheme with a dominant tax-avoidance purpose
Explanation: Part IVA is the general anti-avoidance provision. Where a scheme is entered into for the dominant purpose of obtaining a tax benefit, the Commissioner may cancel that benefit. It is a backstop applied after the ordinary operation of the law and is central to distinguishing legitimate planning from avoidance.
9A taxpayer disagrees with an assessment. What is the correct first formal step to challenge it?
A.Lodge an objection with the Commissioner within the prescribed period
B.Lodge an appeal directly with the High Court
C.Refuse to pay the tax until the dispute is resolved
D.Apply to ASIC for review
Explanation: The dispute process begins with lodging an objection with the Commissioner under Part IVC of the TAA 1953 within the time limit (generally two or four years depending on the taxpayer). If the objection decision is unfavourable, the taxpayer may then seek review at the Administrative Review Tribunal or appeal to the Federal Court.
10The 'self-assessment' system used for company and individual income tax in Australia means that:
A.The ATO calculates and issues tax before any return is lodged
B.The taxpayer's return is generally accepted at face value and an assessment is taken to be made, with the ATO retaining audit and amendment powers
C.Tax is only payable if the ATO selects the taxpayer for audit
D.Companies are exempt from lodging returns
Explanation: Under self-assessment the taxpayer reports income and deductions, and the Commissioner is generally taken to accept the return and make an assessment accordingly. The integrity of the system rests on the ATO's later powers to audit, amend assessments and impose penalties for incorrect reporting.
About the CPA Australia Taxation Practice Questions
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