Taxation Law: Determining Taxable Income and Allowable Deductions

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
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1TAXATION LAW
Table of Contents
Issues:.........................................................................................................................................2
Rule:...........................................................................................................................................2
Application:................................................................................................................................3
Conclusion:................................................................................................................................5
Reference List:...........................................................................................................................6
Appendix:...................................................................................................................................7

2TAXATION LAW
Issues:
The issue here revolves around determining the taxable income for Joan and
considering the transactions that are considered as the allowable deductions under section 6-5
and section 8-1 of the ITAA 1997.
Rule:
As defined under section 6-5 of the ITAA 1997 income that are derived from the
personal exertion includes salaries, allowance, wages, commission, fees, superannuation,
allowance and proceeds from business (Woellner et al. 2016). As held in “Scott v
Commissioner of Taxation (1935)” receipts are treated as income and should be ascertained
in compliance with the ordinary concepts.
Section 8-1 defines that there are two positive limbs for deductions from their
assessable income. An individual can claim allowable deductions if the expenses are incurred
in gaining taxable income or the expenditure is occurred in producing the taxable income
(Robin and Barkoczy 2018). However, under the negative limbs of section 8-1 an individual
is barred from claiming deductions if the expenses are capital in nature or the loss and
outgoing are private or domestic in nature. As held in “Ronpibon Tin NL v Federal
Commissioner of Taxation (1949)” an expenses can be allowed as allowable deductions if it
is occurred in gaining the taxable income (Barkoczy 2016).
Cost that are incurred in general clothing expenses are not considered for deductions
however if the incurs expenses on compulsory uniforms and protective clothing which is
occupation specific can claim allowable deductions (Blakelock and King 2017). As held in
“Mansfield v Federal Commissioner of Taxation” the court allowed the flight attendant to
claim allowable deductions for occupation specific clothing.