Analysis of Allowable Deductions Under Australian Taxation Law

This assignment provides an analysis of various expenses and their deductibility under Australian Taxation Law for the financial year 2016-2017. It examines scenarios related to a restaurant owner, Bhavraj, and assesses whether expenses such as painting costs, oven purchase and installation, refrigerator disposal, car park resealing, and car usage for deliveries are claimable for tax purposes. The analysis refers to relevant sections of the Australian Tax Law, addressing capital expenditure, depreciation, and exemptions for small business owners. It concludes by advising Bhavraj on which expenses can be legitimately claimed to reduce taxable income, referencing specific legal precedents and guidelines from the Australian Tax Office.

AUSTRALIAN TAXATION LAW 1
ANALYSIS ON ISSUES RELATING TO ALLOWABLE DEDUCTIONS CLAIM FOR
AUSTRALIAN TAX PURPOSES
Student’s Name
Institutional Affiliation

AUSTRALIAN TAXATION LAW 2
Question 2;
Australian Tax Office allows taxpayers claim expenses that directly relate to the business
operation when filing their tax return. However the allowable deduction is only claimable upon
satisfaction of certain conditions as outlined and tested in the following below issues as
referenced in (Act, I. T. A. (2011). Act 15.);
(a)The concern in this part is whether the expense of $12000 incurred in painting the restaurant is
claimable for tax purposes. This expense of painting according to Australian Tax Law on repairs,
maintenance and replacement cost is seen to enable the restaurant appear presentable so as to
attract people to come and spend thus generating business income. This painting expense of
$12000 is claimable in the eyes of tax man hence Bhavraj should proceed and claim this in this
year 2016-2017 tax return (Bembrick, 2011.p.13.)
(b)The oven purchased by Bhavraj is new in nature with the total cost of $10000 with incidental
cost of transportation and installation at an amount of 2000 and strengthening floor cost of 2000
totaling the cost of the oven to 14000 Australian Dollars. Ideally this oven acquisition is a capital
expenditure since it is a new asset that has useful life of 5years (Bembrick, 2011.p.13.).Bhavraj
is only eligible to claim depreciation of this asset as 140000/5year=2800 is claimable as
depreciation allowance calculated using the simplicity method of accounting for depreciation for
small business entities (Thomson, 2011.p.7.)
(c)In this case the gain on disposal of the refrigerator for this small business entity for tax
purposes is actually what is being tested. The gain on disposal of this asset is =900-
500=400,hence $400 is the capital gain that tax has to be calculated for, however Bhavraj as a
small business owner he is allowed by Australian Tax Office to claim exemption of 50% of
400=$200 not to be subjected for tax purposes.

AUSTRALIAN TAXATION LAW 3
(d)Cost spend to defend Customers Park of $5000 by Bhavraj is claimable for tax purposes
mainly because customers who will be having vehicles will only come to spend in place where
there is ample space to park hence the parking factor is considered so important when customers
come to spend they will need a place to safely park their cars. Bhavraj restaurant income is
presumed to be controlled by the parking factor hence any cost relating to it is claimable for tax
purposes.
(e)This scenario in question is on car expenditure incurred by Bhavraj in delivering foods to
client point of pick hence the question asked is whether the car expense is claimable for tax
purposes or not. Australian Tax Office on car expenses explains that all car expenses that directly
relate to income generating process for a business is claimable and allowed for tax purposes. I
hence hereby advise Bhavraj to claim this allowable car expense so as to reduce her taxable
income (Woellner, 2012.p.21.)
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References;
Act, I. T. A. (2011). Act 15.
Bembrick, P. (2011). Income tax issues for residential property owners. Taxation in Australia,
46(2), 13.
Thomson, R. K. (2012). Measures of R&D tax incentives for OECD countries.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C., & Pinto, D. (2012). Australian taxation law.
CCH Australia.