Taxation Law Assignment: Analysis of Deductions and Taxation

This assignment analyzes a taxation law problem focusing on allowable deductions related to an investment property. The solution addresses the deductibility of various expenses, including the cost of painting, extending a bathroom, and other costs incurred. The assignment references relevant sections of the ITAA 1997 and ITAA 1936, providing a legal basis for the deductions. The solution also cites legal precedents such as Hallstroms Pty Ltd. v. FC of T. The assignment covers the computation of partnership income and details about costs of maintaining the father bill. The assignment uses the provided references and case laws to justify the deductions or non-deductibility of expenses, offering a comprehensive understanding of taxation principles. The assignment is a valuable resource for students studying taxation law.

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

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Table of Contents
Answer to Question 1:................................................................................................................2
Answer to Question 2:................................................................................................................2
Bibliography:..............................................................................................................................4

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Answer to Question 1:
Computation of Partnership Income
Answer to Question 2:

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Assumptions:
a. Cost of painting the investment property immediately following the purchase of the
property represents an initial repair or improvement to the property and Mary cannot
claim allowable deductions under “section 8-1 of the ITAA 1997”. The cost of
painting the rental property is capital expenditure and it is not incurred in the course
of carrying on of business activities (Brokelind, 2014). Therefore, no allowable
deductions is permitted in this context.
b. Cost of extending the bathroom in the investment property cannot be allowed as
allowable deductions. In reference to section 25-10, expenses that are having capital
in nature are not allowed for deductions (Grange et al., 2014). Citing the reference of
Hallstroms Pty Ltd v. FC of T (1946) expenses incurred in extending or enlarging the
profit deriving structure rather than on working or operating expenses then such
expenses is not allowed for deductions (Jover, 2014). The cost incurred by Mary is
relating to the cost of extending the property and represents a capital cost that is not
related to the income producing activities.
c. Cost incurred in maintaining the father bill is not considered as the allowable
deductions in this context. As stated under the “subsection 51 (1) of the ITAA 1936”

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expenses that are private in nature are not allowed as allowable deductions (Sadiq et
al., 2016). Similarly cost incurred by Mary will not be disregarded form being
considered as allowable deductions.

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Bibliography:
Brokelind, C. (2014). Principles of law. Amsterdam: IBFD.
Grange, J., Jover-Ledesma, G. and Maydew, G. (n.d.). 2014 principles of business taxation.
Jover-Ledesma, G. (2014). Principles of business taxation 2015. [Place of publication not
identified]: Cch Incorporated.
Sadiq, K., Coleman, C., Hanegbi, R., Jogarajan, S., Krever, R., Obst, W. and Ting, A.
(n.d.). Principles of taxation law 2014.