Q4.4 ACCG8124 Presentation Question PDF

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Presentation question 4.4 written analysis...

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ACCG8124 Taxation Law

Nadia Hossain Student ID: 45774188

Question 4.4 Emma, an Australian resident, works full-time for Jenkins Engineers, and is undertaking a Bachelor of Engineering degree at university on a part-time basis. Emma incurred the following expenses during the 2019/20 income year in relation to her engineering studies:  books and stationery $460  cost of travel from work to university $300, then from university to home $250  library fines of $60 for returning books late  food and drink costing $192 consumed at university between  classes student fitness club membership fees $410  repayment of HELP debt $4,600 During 2019/20, Emma also spent $1,200 on a course that qualified her to be a personal trainer and allowed her to get extra income on weekends. Explain what amount Emma could claim as a deduction for self-education expenses. Issue: Which of the expenses above can Emma claim as deductions for self-education purposes and the amount. The Law: Self-education expenses are deductible under Sec 8-1 of ITAA 1997, if the education has direct relation to the occupation and enhances the ability of the taxpayer to increase income earning abilities, like in FC of T v. Finn (1961). Thus, the cases above are to be treated as:  books and stationery: education related expense directly related to undertaking the course and is deductible, and this outgoing satisfies Sec 8(1) of ITAA 1997. the cost of travel between work and university is deductible (TR98/9) but from university to home is not as it is private in nature as per Sec 8-1(2) ITAA 1997.  food and drink consumed at university between classes was not in periods where the taxpayer is attending seminars or had to travel overseas or was staying away from home and hence is non-deductible (TR 98/9).  student fitness club membership fees is not a requirement of the prescribed course of  Section 26-20(1)(cb) and Section 26-20(1)(d) ITAA 1997 specifies that repayments for Higher Education Loan Program is not a deductible.  Personal Trainer course ($1,200): As per Tax Ruling 98/9 and the decision of the High Court in FC of T v. Maddalena 71, self-education expenses for obtaining new employment cannot be deducted as they are incurred too early to be considered as a deduction as per Sec 8(1) of ITAA 1997. Solution: Two from the seven cases enough are identified as self-education expenses and thus the total amount she can claim as a deduction is $760. However, the maximum reduction allowed, as per section 82A applies, the excess of $250 is considered as a deduction, hence $510 can be claimed for deduction. 

Word Count: 316

References ATO references: NO 98/6008-8, 97/9500-6, 97/2396-0, 97/33-1, 96/11680-2, 96/11679-9

ACCG8124 Taxation Law

Legislative References: ITAA 1997 8-1 ITAA 1997 8-1(2) ITAA 1997 26(5) ITAA 1936 82(A) ITAA 1997 26-20(1)(cb) ITAA 1997 26-20(1)(d) Case References FC of T v. Finn (1961) FC of T v. Maddalena (1971)

Nadia Hossain Student ID: 45774188...