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Key Facts: Australia Taxation – Advanced Exam
9
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13%
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MCQ + ER
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Open book
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Elective
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CPA Program Course Guide
100
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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.
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