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Tax Law Tutorial 6 Week 7 - notes


Hotel costs and airline ticket

Hotel costs (because connected with the work-related conference) are deductible as
self-education expenditure under s8-1 ITAA97: FCT v Finn; also part of the cost of
the airline ticket would be deductible under s8-1 ITAA97 as a self-education expense.
Under TR 98/9 the Commissioner would actually allow Ping to deduct 50% of the
cost of the airline ticket (i.e. $1500) as she would be regarded as having two equal
purposes in going to Indonesia (and it doesnt matter that she is actually spending
more than half the time with her family). See TR 98/9 para 70 (on web).

Daily allowance & meal and transport costs

The $200 daily allowance must be included in Pings assessable income: s15-2
ITAA97 (statutory income).
Meal and transport costs related to the conference are deductible under s8-1 ITAA97,
as connected with her self-education purpose in attending the conference. See TR
98/9 para 88-89 (on web).


The first $250 of self-education expenses are not deductible, but note that for the purposes
of getting to the $250 threshold, expenses which are normally non-deductible, but
necessarily incurred by the taxpayer in connection with self-education can be included, e.g.
childcare costs.


The $110 fine is deductible under s8-1 ITAA97 this is a loss incurred in gaining Sarahs
assessable income. A case which can be used to support the deductibility of the expenditure
is Charles Moore see text at p358 this case shows that loss/expenditure can be claimed as
a deduction, even if it is not of a productive nature. A fine imposed in a private context such
as this is not disqualified as a deduction under s26-5 ITAA97 which only applies to penalties
imposed by government.


Under s8-1 ITAA97, so much of her interest expenditure which relates to the library fine is
deductible, i.e. 110/300*60 = $22.

The interest relating to the speeding fine is not deductible for two reasons with one of these
being sufficient for disqualification as a deduction: expenditure incurred in travelling from
home to work is not deductible as it is of a private or domestic nature (Lunney v FCT); also,
this is a penalty imposed by government and non-deductible under s26-5 ITAA97.


No deduction for the $110 fine can be claimed as it has been reimbursed by Sarahs
employer, Martha: s51AH ITAA36.
Tax Law Tutorial 6 Week 7 - notes


Martha would not be regarded as having established a genuine home office (i.e. the home
office cannot be regarded as a place of business), because there is no clearly identifiable
area of her home which has been dedicated for office purposes merely setting up a work
station in her lounge is not good enough. And it is not sufficient that she has no alternative

Compare Swinford where the TV script writer both had a dedicated area set aside for work
purposes (had a business character) and also had no alternative work place.

Here we have a home office for convenience only. Aside - if it had been a place of
business/genuine home office, would have been able to claim both a portion of occupancy
expenses (e.g. interest on mortgage or rent, insurance on house) and running expenses.

Because not a place of business(not a genuine home office) ONLY a portion of running
costs deductible whatever can be reasonably attributable to the work activity i.e. can get a
portion of electricity, heating that is associated with running the laptop and lighting the work
desk. See TR 93/30 on the web, para 2-7.

Lease payments on the laptop are deductible (under s8-1 ITAA97) this would have been
deductible anyway, even if there was no home office. Note these are lease payments, of a
revenue nature, its an outgoing incurred in the course of running a business, deductible
under s8-1.


This is a borderline case. As discussed in tutes, the justification process is most

important here, rather than final conclusion as to deductibility.

An obstacle that Martha faces in trying to claim the DVD production costs as a deduction is
that they might be regarded as expenditure of a capital nature. Applying the test in Sun
Newspapers, it appears the expenditure is incurred to obtain a substantial, lasting benefit.

Under s8-1(2) ITAA97 we are specifically prohibited from deducting expenditures that are
capital in nature.

Another way of looking at it there is too remote a connection with earning of AY, its an
expenditure incurred to put Martha into a position of being able to earn AY.