Taxation Law - Section 8-1 ITAA 1997

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

TAXATION LAW1
Table of Contents
Answer to Part B:.......................................................................................................................2
Issues:.....................................................................................................................................2
Rule:.......................................................................................................................................2
Application:............................................................................................................................4
Conclusion:............................................................................................................................6
Part C:.........................................................................................................................................6
References:.................................................................................................................................8

TAXATION LAW2
Answer to Part B:
Issues:
Whether or not the taxpayer will be allowed to claim an allowable general deduction
under the legislation of “section 8-1 ITAA 1997”?
Rule:
As given in the positive limbs of “sec 8-1 (1)”, a person is permitted to get tax
deduction from their assessable income for any type of loss or outgoing till the extent that it
is occurred in producing the taxable earnings. Deduction for outgoing is allowed to taxpayer
when it is necessary occurred in conducting the business with the objective of generating the
chargeable earnings (Murphy 2019). On the other hand, under the negative limbs of “section
8-1 (2) ITAA 1997” an individual taxpayer is denied deduction when the outgoing or loss is
capital in nature or the expenses are private or domestic in type.
Accordingly, expenditure that are related with the purchase of trading stock are
permitted for deduction for the business under “sec 8-1 ITAA 1997”. Whereas under the “sec
26-5 ITAA 1997” a person is not permitted to claim tax deduction for the amount that is
payable by means of penalty within the Australian law or foreign law or an amount that is
ordered by law court to be paid for an offence against the Australian law (Woellner et al.,
2016).
There might be situation where the expenses are apportioned. Expenses are
apportioned that carries dual purpose (Barkoczy 2016). As noted in “Ure v FCT (1981)”
deduction for expenses are allowed till the extent that indicates in certain situations of loss or
outgoing which requires to be apportioned, in such a situation the loss or outgoing will be
considered partially deductible.