TAX TAX 6 6 TAX Author Note: Income Tax Assessment Act 1997 (ITAA 97) and Jane's Salary

Running head: TAX
TAX
Name of the Student:
Name of the University:
Author Note:

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1. Whether the assessable income of Jane include her salary that he got
from Creative Co Ltd.
Salaries and wages are considered as a type of ordinary income and this can be
supported by the provisions given under section 6.5 contained in Income Tax Assessment
Act 1997 herein after referred to as ITAA 97. From the facts, it appears that the salary
given by the company to Jane amounts 100000 dollars. It being a salary will be subjected
to assessment as ordinary income. Hence her income is considered to be assessable.
2. Whether the travelling expenses incurred deductible.
When a taxpayer incurred any travel expense for her travel from workplace to her
home and also from home to the workplace is not subjected to deductions and this is
given in the case of Lunney v. FCT (1958) 100 CLR 478. This is because such expenses
are considered as private expense. But there lies an exception to this where deduction for
travel expense is permitted when no such fixed place for working is there. When the
decision of the above mentioned case is referred, it is seen that the expenses incurred by
Jane is of private nature and hence no deduction is allowed. Here the exception is not
allowed because the workplaces are fixed for her. Hence deduction is not allowed.
3. Whether the expenses related to home office can be considered to be deductible.
In the case of Handley v. Federal Commissioner of Taxation (1981) 148 CLR 182
it is held that where home office is utilised only as a convenient working place, deduction
is allowed by court regarding the running cost that may include electricity, cooling,
heating and other similar types of expenses. But when a business is carried on in house

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by a tax payer, he is eligible to claim deductions for the cost of occupying such place
together with the costs of rent, council rates and insurance payments. This can be
supported by Swinford v FCT 84 ATC 4803. The area must be mentioned in order to carry
on business. In the present case, it is seen that 10 percent of the total carpet area of her
home is being used related to her employment activity. Such activity includes calling
clients. No business is involved here. The case of Handley v FCT when applied the
running expenditure is subjected to deductions. It shows that she can claim deduction of
10percent on 7000 $ which she spent for electricity. Moreover the only 10 percent of the
house is for earning income. But though the house is used by her but no business is done
by her and thus case of Swinford v FCT cannot be referred here. Hence 30000$ can never
be subjected to deduction.
4. Whether any deduction can be claimed for her membership and subscriptions.
Section 8.1 of the Income Tax Assessment Act 1997enumeraes that a tax payer a
right by which he can claim for deductions related to the expenditure made in order to
earn assessable income. Moreover section 25.55 of the Act states that is allowed
deduction in relation to expenses incurred for membership or subscription maximum upto
threshold amounting 42 dollars and this allowed even if there is no connection of such
membership or subscription for income earning activity. From the facts of the case, it is
seen that Jane subscribed to a membership to the Australian Interior Designers
Association and this is related to her profession. Hence deductions can be claimed by her
for it as per section 8.1. Again she has subscribed to Interior Design journals. This is
related to her profession as she is earning assessable income out of it. Hence both can be
subjected to deductions.