Income Tax Return of Jane Herman

Taxation law

TABLE OF CONTENTS
Question 1: Income Tax Return of Jane Herman.......................................................................3
Provisions...............................................................................................................................3
Income tax calculations..........................................................................................................3
Working notes........................................................................................................................3
Question 2: FCT v Cooke & Sherdon (1980)............................................................................3
Issue........................................................................................................................................3
Provisions...............................................................................................................................3
Applicability...........................................................................................................................4
Conclusion..............................................................................................................................4
References..................................................................................................................................5

QUESTION 1: INCOME TAX RETURN OF JANE HERMAN
Provisions
In the given study, Jane Herman is a chartered accountant and engages in the part time
working as a financial controller of hotels in Sydney. He along with the receiving salary from
the hotel also generate the income by carrying out the sole taxation practice.
Employment income refers as the earning derived from the employment. The person should
include all the income generated from the employment whether it is received in cash or in any
manner subject to some norms (Martins, 2018).
In the term salary and wages, commission, bonus, parental leave, payment received under the
work compensation scheme, money received under casual work etc. is included (Shields and
et.al, 2015). Along with this, if the employer provides any other payment in the course of the
employment and allowances such as travel, clothing, car, laundry, and payment for the
services then also it is included in the assessable income of the employee.
Further the person can also claim for the deduction of the expenses, if it is directly related
with the generation of the income. For claiming the deduction there must be some condition
which is to be fulfilled by the assesse, such as –
 The money which is spent is not reimbursed by any other person.
 It must be directly related with the income.
 The person who claiming the deduction must have the record for the evidence.
Capital allowance related with motor car
If an individual makes use of own car in carrying out their work-associated duties inclusive
of a car leased or owned, then they might be capable to claim for a deduction for related
expenditures. Further, if an individual gains an allowance from their employer for car
expenditures then it is considered as an assessable income and the same must be comprised in
their tax return (Knechel & Salterio, 2016). Further the allowance amount is generally is
reflected in their payment details. One can select one of the two key methods for the
calculation of car expenditure deductions which are namely: cents per kilometer method and
logbook method.

An individual can make claim for deductions for a work-related car expenditures if they make
use of their own car in conducting their job performance as an employee, such as carrying
bulky tools and equipment that their employee needs to use for operation, attending meetings,
delivering supplies, conducting itinerant work, traveling among two different employment
places and traveling from usual workplace to an optional workplace (Australian Taxation
Office, 2019).
Provisions related with the rental income
If an individual made investment in a rental property or rented their existing property, then
they will be required to retain records from the starting basis, while working out for expenses
then they need to claim for deduction, and must announce all their rental associated income in
their tax return (Paris, 2017). The taxpayer can make claim for deduction for their associated
expenditures for the period when the property is rented out or is accessible for rent, then
include the management as well as maintenance costs inclusive of all interest on loans can
often be claimed on an immediate basis i.e. deducted in opposition to their present income
year. Borrowed expenditures, spending of capital works and depreciation can be deducted
for several years.
Capital work allowance
Capital works are employed to generate income, inclusive of structural developments and
buildings are written off above a longer period as compared to other depreciating assets.
Further, the taxpayer can make claim for deduction for the overall costs of the assumption in
the year it took place. The deduction is calculated by 2.5% or 4% of the construction based
expense based on the time construction started and how the usage of capital works is done.
According to the ITAA 1997 Div 43, a person paying tax can claim for a deduction for
capital expense occurred in construction of capital works which are employed for income
generating purposes (Australian Taxation Office, 2019). Further, the construction must be
done prior when there is accessibility of deduction. The capital work deduction is accessible
for buildings, alterations, developments or extensions, structural improvement for example
sealed driveways and holding ways and earthworks for protection for environment like
embankments.
Provisions related with the dividend