Before you file your taxes online or submit a tax return, there are some critical things you need to understand. The original Taxpayers' Charter clearly says that personal tax is voluntary — it works on a system of voluntary compliance. Most people are never told this and believe they MUST pay tax when, in fact, they do not.
The history of personal income tax
Federal personal income tax was introduced in 1915 to help fund the First World War. During the Second World War, the Commonwealth introduced the uniform income tax arrangements of 1942. Personal income tax was supposed to be repealed after that time, but never was, because the government was, by that point, hooked on all the extra income it was making from taxpayers.
Since that time, everything has been commercialised and corporatised. Companies have an obligation to pay tax on profit. But when it comes to individuals, the same does not apply. The Taxpayers' Charter clearly states that personal tax is voluntary — it works on a system of voluntary compliance. You can download a copy of the Taxpayers' Charter and read section 6 on page 23 for yourself.
Personal income tax is voluntary
The Taxpayers' Charter confirms that personal tax works on a system of voluntary compliance. You are never told this because the government is hooked on the income. Educate yourself, understand your rights, and make informed decisions.
What do you pay tax on?
With a company, it's fairly simple — they take their sales or "income", deduct expenses including wages, and pay tax on any "profit" they make. The company makes that profit for nothing, so why shouldn't it pay a portion to the government?
But when it comes to an individual, things aren't as clear. Whether you are a PAYG employee or you run your own business, you put in certain hours. You expend energy, effort, thought, and most of you would also have experience or expertise. You should be justly compensated for all of that.
So, what do you value your time, effort and energy at? If it just so happens that you value it at the current rate you are being paid — or more — then you have not personally made any "profit". You have simply exchanged your time for money and there should be no obligation to give anyone a part of that because it's yours.
The ALL CAPS name and your TFN
How does the tax office get around this? They issue your ALL CAPS name with a TFN and treat you like a company. The government has confirmed via Freedom of Information that they have no documents authorising them to create "taxpayer entities" from tax file number applications — yet that is exactly what they do every day.
This opens up the argument about the difference between you — the flesh-and-blood human being — and the corporate ALL CAPS name that the government created for you, your Strawman. The ATO works on the assumption that your ALL CAPS name has no expenses, so all of your "income" is actually profit to that paper entity — and that's how they justify it.
The word "income" is never defined
When you go to fill out the ATO's form, they ask you to specify your "income" — but they don't actually ever define the word. The Income Tax Assessment Act is a monumental document that refers to terms such as "assessable income", "statutory income", "ordinary income", "exempt income", "non-assessable, non-exempt income" — all these crazy terms, but not a single, simple definition of "income".
We challenge you to write to the ATO and explain that you are considering voluntarily filling out an income tax return statement but, before you can do so, you need them to define the word "income" for you. Then follow that up by asking them to direct you to the section of the Income Tax Assessment Act that specifically defines the word.
Is the ATO a legal entity?
Another argument many people aren't aware of is that the ATO — the Australian Taxation Office — is not actually a legal entity. This has been established clearly in an irrefutable High Court case: the Moeliker v Chapman Case in the High Court on 17 May 2000. A simple search under AustLII will reveal that case.
The GST strategy
Here's another strategy: write to the ATO and ask them for a specific breakdown of all GST that you have paid during the year so that you can properly fill out your income tax statement. There is simply no way they can do that, and we have heard positive responses from people who have tried this strategy.
We're certainly not suggesting everyone should rush off and stop paying tax, but we definitely recommend looking into these strategies and principles for yourself. Once informed and educated about taxation and your rights, you can make proper decisions about the best course of action for you.
Questions to ask before taking action
Did you know personal tax is voluntary? The Taxpayers' Charter says personal tax works on voluntary compliance. Most people are never told this.
Is your TFN issued to your ALL CAPS name? The ATO treats you like a company by issuing a TFN to your Strawman — but they have no documents authorising them to create taxpayer entities.
Can the ATO define "income"? The Income Tax Assessment Act never actually defines the simple word "income" — challenge them to provide a definition.
Is the ATO a legal entity? The High Court case Moeliker v Chapman (2000) established that the ATO is not a legal entity.
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Disclaimer: The information provided by Know Your Rights Group is for educational purposes only and does not constitute legal advice. Always seek independent legal advice for your specific situation.