calvin

Under which section of the australian taxation law does it say that PAYG is not deductible?

CamperdownT3925

section 8-1 of the Income Tax Assessment Act 1997 basically says that you can claim a deduction for an expense that you incur in connection with earning your income to the extent that it's not of a private or domestic nature. An expense which offsets your taxable income is called a deduction. PAYG doesn't offset your taxable income, it offsets your tax on taxable income. That's because PAYG is neither an expense nor incurred in the course of earning your income, it's just tax on taxable income paid in advance. So by its very definition and character it does not come within the scope of section 8-1. There don't need to be sections in our tax legislation for every single thing that's not an allowable deduction under section 8-1; that would make a tax legislation a million pages long. And it works just fine as it is if you know how to interpret it and read the legislation's dictionary at section 995 to understands its terms.