Expenses incurred by taxpayers in gaining or producing assessable income may be deducted against that income to reduce the taxpayer's final tax liability.
(Note 1: not put taxpayer in a position to gain or produce assessable income.)
- may be deductible immediately under the general deduction provision in S 8-1 (C12)
- or under a specific deduction provision S 8-5 (C13)
- Capital expenses that are not immediately deductible may be deductible over a period of years. (C14) Capital allowance
(Note 2: may claim a deduction for a part of an expense where only a part of the expense satisfies the requirements of S 8-1, including expenses partly incurred to gain/ produce assessable income, or for private purpose)
2. General deduction rule (C12)
S 8-1(1) provides that a taxpayer can deduct from his or her assessable income a loss or outgoing to the extent that it is:
• incurred in gaining or producing assessable income; or
• necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income.
- Negative limbs:
S 8-1(2) stipulates that an expense that satisfies the positive limbs of S 8-1 may nonetheless not be deductible under S 8-1 to the extent that it is:
• capital or capital nature
• private or domestic
• incurred in gaining exempt or non-assessable non-exempt (NANE) income
• prevented from being deducted by a specific provision of the income tax legislation.p.378
- Application of S 8-1 to commonly incurred expenses:
1. Expenses incurred in gaining employment - 运动员P392，名人
2. Relocation expenses
3. Child care expenses
*1,2,3 通常情况下不可以的deuctable 4. Travel expenses
5. Self-education expenses
6. Home office expenses
7. Clothing expenses
8. Interest expenses - Gearing Issue
9. Legal expense
1. The type of travel
• Travel between home and work : Not Deductible (Lunner v FCT; Hayley v FCT (1958)) except:
- Travel outside normal work hours
- Itinerant workers
- Bulky items
- Alternative workplace
• Travel between two places of work
- two places related to the same income-producing activity - deductible or not deductible.Z
2. Calculation of car expenses
Business km travelled 5000
Cents per kilometre
12% of original value
One -third of actual expense
• Cents per kilometre
Engine ( rotary Engine)
Cents per km
Note: it can be only used for the first 5000km, any business travel in excess of 5000km is disregarded.
•12% of original value
Note: the depreciation car limit $57466, only available for business travel >5000km.
• One -third of actual expense
- include undertaking a course at an education institution, attending a work-related conference or seminar, completing a self-study course or going on a study tour in Australia or overseas.
•course fees, books, stationery and travel (more details in p408) to attend conferences or seminars
• meals and accommodation expenses may be deductible where the taxpayer is away from home overnight
-Positive limbs of S 8-1(p405)
•related to taxpayer's current career
•current career requires taxpayer to stay up to date
-Negative limbs of S 8-1 (p413)
•Capital expenses - cost of personal computer, laptop ....
•Private or domestic expense
•Non-deductible self-education expenses
1) any payments made under the Higher Education Support Act 2003 or the Student Assistance Act 1973 (e.g. HECS-HELP fees) are not deductible under s 26-20.
2) S 82A of ITAA 1936 prevents the first $250 of self-education expenses incurred by a taxpayer from being deductible.
- Note: Apportionment p415
Home office expenses
Genuine home office
Home office for convenience only