For Questions 1-5 identify which items are assessable and which items are deductible. Follow Figure 2.3 of ‘Principles of Taxation Law’ textbook to answer the problems:
Step 1: Understand the question and the facts
Step 2: Identify the taxation law issues that are raised (see below items)
Step 3: Research the relevant legislation and case (see ‘Principles of taxation law’ Topics, 2, 5, 6,7,8, 9,11,12,13,14, 25.)
Step 4: Apply the law to the problem, referring to relevant cases and legislation
Step 5: Form a conclusion.
Q1: Items to be identified:
Salary
Airfares
Hotel Accommodation
Acquisition of property in Bendigo
Rent
Interest
Q2: Items to be identified:
Cost of Ramp
Structural Improvement and capital works
If an item comes with Division 40 (depreciating asset) and Division 43 (capital works), Division 43 takes priority
Q3: Items to be identified:
Sale of property
Real estate agent’s commission
Solicitor’s fees
Cost base of a CGT asset.
Q4: Items to be identified:
FBT
Reimbursements
Q5: Items to be identified:
Rent
GST
FBT
Deductible expense
Suggested Method/Steps for Approaching an Item of Expenditure
1.Is the expenditure deductible (which may include an analysis as to whether the expenditure is of a capital nature) under s 8-1? If “Yes”, then the amount is fully deductible under s 8-1. Deductions are not available elsewhere. If “No”, you should proceed to Step 2.
Sample Solution