Answer Guide
Question 1
Discuss briefly, citing sections, whether the following amounts are deductible for the
taxpayer (1 mark each).
(i) The taxpayer incurred an amount of $1,800 in borrowing charges when applying
...
Answer Guide
Question 1
Discuss briefly, citing sections, whether the following amounts are deductible for the
taxpayer (1 mark each).
(i) The taxpayer incurred an amount of $1,800 in borrowing charges when applying
for finance with WBank.
(ii) The taxpayer paid his accountant $300 in fees. This amount was for the
accountant preparing the taxpayer’s income tax return.
(iii) The taxpayer is an employee at a law firm in town. He spends $40 getting a taxi to
work as all public transport has been canceled that day and does not want to be
late for a client meeting.
(iv) The taxpayer is an accounting student and incurs $20 in taxi fares for travel
between the supermarket where he works during the day as a cashier, and a
the nightclub where he works selling drinks in the evening.
Answer Guide
(i) Yes deductible – s 25-25 borrowing expenses
(ii) Yes deductible – s 25-5 tax-related expenses
(iii) Not deductible – s 25-100(3) travel, as he travels from home no deduction
(iv) Yes deductible – s 25-100 (2) as he produces assessable income at both
Question 2
For the below two transactions for Eddie state for each of them, if any, the CGT
event, timing of the event, the capital proceeds, the cost base, and whether Div 115
applies. Where appropriate support your answer with legislative authority (2 marks
each)
(i) Eddie runs a small mortgage broking firm and paid an amount of $40,000 as a
premium to secure a lease in an office building in Burwood. This is in addition
to both a bond paid and to the monthly rent. He paid the $40,000 and the first
month of rent in January 2017. The lease expired in January 2020.
Answer Guide
(i) Note that the question says for Eddie. A lot of students answered this with an F1,
but that is for the lessor (Eddie is lessee) so for him, it is a C2 event on ending. A
lot answered F1 because they used the response from seminar practice question
so make sure careful here.
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