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100+ Free Australia Taxation – Advanced Practice Questions

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Key Facts: Australia Taxation – Advanced Exam

9

Exam Modules

CPA Australia Subject Page

13%

Top Module Weighting

CPA Australia Subject Page

MCQ + ER

Question Formats

CPA Australia Subject Page

Open book

Exam Conditions

CPA Australia

Elective

Subject Type

CPA Program Course Guide

100

Free Practice Questions

OpenExamPrep

Australia Taxation – Advanced is an elective CPA Program subject building on Australia Taxation. Its open-book computer-based exam combines multiple-choice and extended-response questions across nine modules: Companies and company distributions (13%), Tax theory, policy, reform and anti-avoidance (13%), Trusts and trust distributions (12%), Superannuation (12%), Consolidations (10%), Complex business structures (10%), Corporate financing (10%), International transactions and cross-border tax issues (10%), and Advanced GST issues (10%). CPA Australia does not publish a fixed question count or subject pass rate; it applies a scaled pass standard. The subject reflects legislation in place at the stated date for the relevant Australian tax year.

Sample Australia Taxation – Advanced Practice Questions

Try these sample questions to test your Australia Taxation – Advanced exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Part IVA of the Income Tax Assessment Act 1936 (the general anti-avoidance rule) can be applied by the Commissioner only where a scheme has been entered into for what purpose?
A.The dominant purpose of obtaining a tax benefit
B.Any incidental purpose of reducing tax
C.The sole purpose of avoiding GST
D.A purpose of deferring income for commercial reasons
Explanation: Part IVA applies where, having regard to the eight factors in s 177D, it would be concluded that a person entered into or carried out the scheme for the dominant (sole or main) purpose of enabling a taxpayer to obtain a tax benefit. A merely incidental tax purpose is insufficient.
2Which set of eight matters must the Commissioner consider when determining whether the dominant-purpose test in Part IVA is satisfied?
A.The general deduction rules in section 8-1 of the ITAA 1997
B.The factors listed in section 177D of the ITAA 1936
C.The residency tests in section 6-5
D.The CGT discount conditions in Division 115
Explanation: Section 177D sets out the eight objective factors (manner, form and substance, timing, result, change in financial position of the taxpayer and connected persons, and any other consequence and relationship) used to conclude the dominant purpose of a scheme.
3A 'tax benefit' for Part IVA purposes is identified by comparison with what hypothetical scenario?
A.The average effective tax rate of comparable taxpayers
B.The taxpayer's prior year tax position
C.A reasonable counterfactual or alternative postulate of what would have happened absent the scheme
D.The position of a related foreign entity
Explanation: A tax benefit under s 177C is measured against the counterfactual or alternative postulate, being a reasonable prediction of what would have occurred or might reasonably be expected to have occurred had the scheme not been entered into.
4The Multinational Anti-Avoidance Law (MAAL) and the Diverted Profits Tax (DPT) are best described as:
A.Parts of the GST anti-avoidance regime
B.Concessions reducing tax for exporters
C.Rules that only apply to individuals
D.Targeted integrity measures aimed at significant global entities shifting profits offshore
Explanation: Both the MAAL and the DPT (a 40% penalty rate of tax) are integrity measures targeting significant global entities that enter schemes to avoid a taxable presence or divert profits offshore, supplementing the general Part IVA regime.
5Which principle reflects a key objective of a good tax system as commonly evaluated in tax policy analysis?
A.Equity, efficiency and simplicity
B.Maximising government revenue at any cost
C.Taxing only foreign residents
D.Eliminating all compliance obligations
Explanation: Tax policy is generally evaluated against criteria such as equity (horizontal and vertical), economic efficiency (minimal distortion), and simplicity/administrability. These criteria often involve trade-offs that policymakers must balance.
6When a promoter markets an arrangement that the Commissioner considers a tax exploitation scheme, which regime may impose civil penalties on the promoter?
A.The CGT small business concessions
B.The promoter penalty rules in Division 290 of Schedule 1 to the Taxation Administration Act 1953
C.Division 7A
D.The TOFA rules in Division 230
Explanation: Division 290 of Schedule 1 to the TAA 1953 imposes promoter penalties on entities that promote tax exploitation schemes or implement schemes in a way that is materially different from a product ruling.
7Which statement about the interaction between Part IVA and specific anti-avoidance provisions is correct?
A.Part IVA overrides the entire ITAA 1997
B.Part IVA can never apply if a specific provision exists
C.Part IVA is a provision of last resort that can apply even where specific provisions also operate
D.Part IVA only applies to GST schemes
Explanation: Part IVA is generally regarded as a provision of last resort, but its operation is not excluded merely because a specific anti-avoidance provision could also apply. The Commissioner may rely on it where a tax benefit arises from a scheme with a dominant tax-avoidance purpose.
8A taxpayer seeks certainty about the tax treatment of a proposed transaction before lodging. Which ATO product provides binding guidance specific to their facts?
A.An ATO interpretative decision summary
B.A taxpayer alert
C.A practical compliance guideline
D.A private binding ruling
Explanation: A private binding ruling sets out the Commissioner's view on how a tax law applies to a specific taxpayer's particular arrangement and is binding on the Commissioner for that taxpayer if the facts are as described.
9Under Part IVA, when the Commissioner makes a determination, the consequence is that the Commissioner:
A.Cancels the tax benefit obtained under the scheme
B.Imposes a fixed 40% penalty on all taxpayers
C.Disregards the entire commercial transaction for all purposes
D.Refers the matter automatically to criminal prosecution
Explanation: Where Part IVA applies, the Commissioner makes a determination under s 177F to cancel the whole or part of the tax benefit. Compensating adjustments may also be made for affected taxpayers.
10Which of the following is a recognised function of Australia's transfer pricing rules in Subdivision 815?
A.Exempting all foreign income from tax
B.Ensuring cross-border related-party dealings are priced on arm's length terms
C.Setting the company tax rate
D.Calculating the CGT discount
Explanation: Subdivision 815 aligns Australia's transfer pricing rules with OECD principles, requiring conditions between cross-border associated enterprises to reflect arm's length conditions, so that profits are not inappropriately shifted out of Australia.

About the Australia Taxation – Advanced Exam

Australia Taxation – Advanced is an elective CPA Program subject that builds on Australia Taxation, examining advanced Australian tax issues across companies and distributions, trusts, superannuation, consolidations, complex business structures, corporate financing, international transactions, advanced GST, and tax theory, policy, reform and anti-avoidance.

Assessment

Question count not published by the exam provider

Time Limit

Computer-based exam within the study period exam window; confirm current duration in the subject outline

Passing Score

CPA Australia applies a scaled pass standard; no fixed public raw percentage

Exam Fee

CPA Program subject enrolment fee set by CPA Australia; confirm the current AUD amount at enrolment (CPA Australia)

Australia Taxation – Advanced Exam Content Outline

13%

Companies and company distributions

Company tax and base rate entities, imputation and franking, Division 7A deemed dividends, benchmark franking, share buy-backs, capital streaming integrity rules, and corporate loss recoupment.

13%

Tax theory, policy, reform and anti-avoidance

Tax policy criteria, reform context, Part IVA general anti-avoidance, section 177D factors, MAAL and diverted profits tax, promoter penalties, and ATO rulings and guidance.

12%

Trusts and trust distributions

Present entitlement, Division 6 proportionate approach, sections 97, 98, 99 and 99A, streaming under Subdivision 115-C, section 100A, family trust elections, and trust losses.

12%

Superannuation

Contributions caps, Division 293, SMSF compliance, in-house assets, LRBAs, non-arm's length income, transfer balance cap, exempt current pension income, and death benefits.

10%

Consolidations

Single entity rule, forming a consolidated group, allocable cost amount, entry and exit tax cost setting, transferred losses and available fractions, MEC groups, and TOFA interaction.

10%

Complex business structures

Choice of structure, CGT rollovers, small business restructure rollover, personal services income, partnerships, scrip-for-scrip, and the small business CGT concessions.

10%

Corporate financing

Taxation of financial arrangements (TOFA, Division 230), debt and equity classification under Division 974, thin capitalisation reform, debt deduction creation rules, and interest deductibility.

10%

International transactions and cross-border tax issues

Residency, foreign income tax offsets, controlled foreign companies, non-portfolio dividends, withholding taxes, transfer pricing, hybrid mismatches, treaties, and foreign resident CGT.

10%

Advanced GST issues

GST-free and input taxed supplies, financial supplies and the financial acquisitions threshold, the margin scheme, going concern, and Division 165 GST anti-avoidance.

How to Pass the Australia Taxation – Advanced Exam

What You Need to Know

  • Passing score: CPA Australia applies a scaled pass standard; no fixed public raw percentage
  • Assessment: Question count not published by the exam provider
  • Time limit: Computer-based exam within the study period exam window; confirm current duration in the subject outline
  • Exam fee: CPA Program subject enrolment fee set by CPA Australia; confirm the current AUD amount at enrolment

Keys to Passing

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

Australia Taxation – Advanced Study Tips from Top Performers

1Allocate study time using the nine module weightings, prioritising the two 13% modules and two 12% modules first.
2Master Division 7A, trust streaming, and Part IVA, as these high-weight integrity areas recur across scenarios.
3Practise applying TOFA, consolidation cost-setting, and thin capitalisation rules to numerical examples, not just definitions.
4Build an open-book index of key provisions and rates so you can locate them quickly under exam time pressure.
5Confirm current rates and thresholds (such as the Division 7A benchmark rate and contributions caps) against the subject's legislation cut-off.
6Rehearse extended-response answers by structuring issue, rule, application, and conclusion within tight time limits.

Frequently Asked Questions

What is the CPA Australia Taxation – Advanced exam format?

CPA Australia states that the Australia Taxation – Advanced exam is computer-based and open-book, with a combination of multiple-choice questions and extended-response questions. It does not publish a fixed number of questions for the subject.

What modules are covered in Australia Taxation – Advanced?

The subject has nine modules: Companies and company distributions (13%), Tax theory, policy, reform and anti-avoidance (13%), Trusts and trust distributions (12%), Superannuation (12%), Consolidations (10%), Complex business structures (10%), Corporate financing (10%), International transactions and cross-border tax issues (10%), and Advanced GST issues (10%).

Is Australia Taxation – Advanced a core or elective subject?

It is an elective subject in the CPA Program. It builds on the core Australia Taxation subject, so CPA Australia recommends completing Australia Taxation first as it provides the foundation for the advanced material.

What tax year and legislation does the exam reflect?

The subject reflects Australian tax legislation in place at the cut-off date stated in the subject outline, with exam questions generally based on the relevant tax year. Candidates should confirm the current legislation date in the official subject outline each study period.

What is the pass mark for Australia Taxation – Advanced?

CPA Australia does not publish a fixed raw passing percentage. It applies a scaled pass standard determined for each exam, so candidates should aim for consistent mastery across all nine modules rather than a single target percentage.

How much does the subject cost?

The subject is enrolled and paid for through the CPA Program. CPA Australia sets the subject enrolment fee, which can vary, so candidates should confirm the current AUD amount when enrolling for the study period.

What topics carry the highest exam weighting?

Companies and company distributions and Tax theory, policy, reform and anti-avoidance each carry 13%, the highest weightings. Trusts and trust distributions and Superannuation each carry 12%, while the remaining five modules each carry 10%.

Is the exam open book?

Yes. CPA Australia's tax subjects are open-book exams, allowing candidates to use permitted reference materials. Candidates should still know the law well enough to apply it quickly within the exam time, as searching materials is time-consuming.