HI3042- Taxation Law Assignment

HI3042 Taxation Law
T2 2017 Individual Assignment

TABLE OF CONTENTS
Solution 1......................................................................................................................3
Issue..........................................................................................................................3
Legal provisions........................................................................................................3
Application on cited transactions..............................................................................4
Solution 2......................................................................................................................5
Issue..........................................................................................................................5
Legal provisions........................................................................................................5
Application on cited transactions..............................................................................5
Conclusion................................................................................................................6
Solution 3......................................................................................................................6
Issue..........................................................................................................................6
Legal provisions........................................................................................................6
Calculations...............................................................................................................6
Solution 4......................................................................................................................8
Issue..........................................................................................................................8
Legal provisions and Calculations............................................................................8
References.................................................................................................................10

SOLUTION 1
Issue
The issue is to determine whether the following cited expense are allowable as
general deductions under section 8.1 ITAA 1997.
Expense 1 The cost of moving machinery to a new site
Expense 2 The cost of revaluing assets to effect insurance cover
Expense 3 Legal Expenses incurred by a company opposing a petition for
winding up
Expense 4 Legal Expenses incurred for services of a solicitor in respect of a
number of matters
Legal provisions
Calculation of income tax is done according to the taxable income of taxpayer.
Further the taxable income is computed by subtracting general and specific
deductions from the total assessable income of taxpayer (Somers and Eynaud,
2015).
In accordance with ITAA97 s 8-1, a general deduction is loss/expense that contains
an applicable relation with the income generating activities, such as personal efforts,
investment or operating activities, but it is not of capital and neither of domestic
nature.
SECTION 8-1 (General deductions)
One can make deduction from their assessable income if any loss/outgoing satisfies
one of the following two provisions:
 If the loss/outgoing is incurred while producing or gaining assessable income
 It is automatically incurred in carrying a business with the intention of
producing or gaining assessable income (SECTION 8-1 General deductions,
2017).
Under s 8-1(2), one the other hand one cannot make deductions from their
assessable income if any loss/expense if following cited aspect is satisfied as Act
does not allow to make deduction: