100+ Free CPA Australia Taxation Practice Questions

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2026 Statistics

Key Facts: CPA Australia Taxation Exam

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 Exam

Australia Taxation is a foundation-level elective in the CPA Program covering the fundamental principles of Australian tax law, including assessable income, deductions, capital gains tax, taxation of individuals and entities, GST and fringe benefits tax, assessed through multiple-choice and extended-response questions in an open-book computer-based exam.

Assessment

Question count not published by the exam provider

Time Limit

Computer-based exam with a set duration plus reading time per the current CPA Program timetable

Passing Score

No fixed pass mark published; CPA Australia reports a pass/fail grade after standard setting

Exam Fee

CPA Program subject enrolment fee per the current CPA Australia fee schedule; varies by region and member status (CPA Australia)

CPA Australia Taxation Exam Content Outline

15%

Legal, ethical and regulatory fundamentals

Sources of Australian tax law (ITAA 1936/1997, TAA 1953), constitutional basis, self-assessment, rulings, objections, residency and source, Part IVA anti-avoidance, and the tax agent ethical framework under TASA.

25%

Principles of taxable income

Assessable income (ordinary and statutory), derivation, general and specific deductions, trading stock, capital allowances, prepayments, exempt income, tax losses, and taxable income calculation.

15%

CGT fundamentals

CGT events, cost base and reduced cost base, the 50% discount, capital losses, main residence and other exemptions, collectables, pre-CGT assets, indexation, death rollovers, and small business CGT concessions.

15%

Taxation of individuals

Resident and foreign resident rates, the tax-free threshold, Medicare levy and surcharge, work-related deductions, dividend imputation, offsets, superannuation, foreign income tax offset, PAYG, and substantiation.

15%

Taxation of various entity types

Companies and the corporate rate, base rate entities, imputation and franking, partnerships, trusts and present entitlement, superannuation funds, loss recoupment, personal services income, and structure comparison.

15%

GST and FBT fundamentals

GST registration, taxable, GST-free and input-taxed supplies, input tax credits, tax invoices, the BAS, and fringe benefits tax including the 47% rate, gross-up, car benefits, exemptions, and salary sacrifice.

How to Pass the CPA Australia Taxation Exam

What You Need to Know

Passing score: No fixed pass mark published; CPA Australia reports a pass/fail grade after standard setting
Assessment: Question count not published by the exam provider
Time limit: Computer-based exam with a set duration plus reading time per the current CPA Program timetable
Exam fee: CPA Program subject enrolment fee per the current CPA Australia fee schedule; varies by region and member status

Keys to Passing

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CPA Australia Taxation Study Tips from Top Performers

1Allocate the most time to Principles of taxable income, the largest module at 25% of the exam weighting.

2Practise full CGT calculations end to end: cost base, capital losses applied before the discount, then the 50% discount.

3Know the distinction between GST-free and input-taxed supplies, because input tax credit entitlement differs between them.

4Memorise the key rates: resident brackets, 2% Medicare levy, 10% GST, 47% FBT, 30% company rate, and the 50% CGT discount.

5Because the exam is open book, build an indexed set of notes so you can locate rules quickly under time pressure.

6Drill entity taxation flow-through: partnerships and trusts do not pay tax themselves, while companies do and frank dividends.

Frequently Asked Questions

How many questions are on the CPA Australia Taxation exam?

CPA Australia does not publish a fixed total question count. The Australia Taxation exam is open-book and computer-based, and combines multiple-choice questions with extended-response questions that require applied calculations and written answers.

What topics does CPA Australia Taxation cover?

The subject is built around six modules: 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%).

Is the CPA Australia Taxation exam open book?

Yes. The Australia Taxation exam is an open-book, computer-based proctored exam. Candidates should still know the law well, because the exam tests applied analysis and timing rather than simple recall of statutory references.

What is the difference between Australia Taxation and Australia Taxation Advanced?

Australia Taxation is pitched at a foundation level covering income tax, CGT, GST and FBT for a range of taxpayers. Australia Taxation Advanced examines more complex business structures, GST, international transactions and anti-avoidance regimes.

What tax rates should I know for CPA Australia Taxation?

Key rates include the resident marginal rates (0%, 16%, 30%, 37%, 45%), the 2% Medicare levy, GST at 10%, the FBT rate of 47%, the company rate of 30% (25% for base rate entities), and the 50% CGT discount for eligible individuals and trusts.

How much study time does CPA Australia Taxation require?

CPA Australia estimates the workload is equivalent to a one-semester postgraduate unit, with around 15 hours of study per week across the semester for an average candidate, concentrated on applied problem solving.

Does CPA Australia publish a pass mark for Australia Taxation?

No. CPA Australia does not publish a fixed pass mark or a per-subject pass rate. Results are released as a pass or fail grade after each exam period, following CPA Australia's standard-setting process.

Is Australia Taxation a core or elective subject?

Australia Taxation is an elective subject in the CPA Program. Candidates can study it, Australia Taxation Advanced, or both, depending on their career goals and the local taxation knowledge they need.

100+ Free CPA Australia Taxation Practice Questions

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