Personal Finance

Running head: PERSONAL FINANCE
Personal Finance
Name of the Student
Name of the University
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Course ID

1PERSONAL FINANCE
Table of Contents
Answer to question Mini Case 3:...............................................................................................2
Answer to question Mini Case 4:...............................................................................................3
References:.................................................................................................................................5

2PERSONAL FINANCE
Answer to question Mini Case 3:
According to the Australian taxation office an individual taxpayer is required to
declare the income that they have received for each of the financial year in their tax return.
According to the ATO the employment income comprises of the money that is received by
working as the employee (Ato.gov.au 2019). As per the “section 6 of the ITAA 1936”
income obtained from the personal exertion includes salaries, wages etc. received in capacity
of the employee. Usually income that is received by the taxpayer is regarded as ordinary
income under “section 6-5, ITAA 1997”. As held in “CT v Scott (1935)” income does not
signify the word of art and should be determined in compliance with the ordinary concepts
and usages (Woellner et al. 2016). The salary of $65,000 is included for assessment purpose
as it amounts to ordinary income under “section 6-5, ITAA 1997”.
A taxpayer is permitted to claim deduction under “section 8-1 of the ITAA 1997” for
the outgoings that are occurred in producing income. Evidently, under the negative limbs of
“section 8-1 (2), ITAA 1997” an individual is not allowed to claim deduction for outgoings
that are private, domestic or capital in nature (Barkoczy 2016). Taylor will be denied
deduction under “section 8-1 (2), ITAA 1997” for food and household, credit card payments
and entertainment expenses. These expenses are private and domestic in nature and does not
satisfies the eligibility of positive limbs (Ato.gov.au 2019).
Self-education expenditure is usually allowed for deduction when it is occurred for
maintaining or increasing the skills of employment of taxpayer in an occupation in which the
taxpayer is presently employed, particularly when the expenses improves the prospect of
promotion or generating higher income. As held in “FCT v Studdert (1991)” the taxpayer
was allowed deduction for undergoing flying lesson as it would enhance the performance in
his present job and increase the prospect of promotion (Barkoczy 2016). The training course