Sarah is employed as a personal assistant to Martha Tallis, a successful freelance lifestyle consultant and motivational speaker. One day, Martha told Sarah to go to the library and borrow a book which Martha needed to prepare for a speech. Sarah borrowed the book and gave it to Martha. Four weeks later Sarah received an email from the library advising her that the book was overdue. Sarah asked Martha for the book so that she could return it. Martha could not find the book. When Sarah told the library that the book was lost, the library demanded that she pay a $110 fine for the loss of the book.

A) Advise Sarah as to the deductibility of the $110 fine payment.

B) Sarah did not have $110 in cash in order to pay the library fine, so she charged the fine payment to her credit card, which incurred interest at a rate of 20% per annum. On that same day, Sarah also paid a $190 speeding fine with her credit card, which was the result of her speeding to get to work on time. Twelve months later Sarah was able to pay off the total amount of $300 which she had charged to her credit card. By that time, she had paid an amount of $60 in interest.

Advise Sarah as to the deductibility of the interest.

C) Sarah felt extremely annoyed about the library fine and decided to talk to Martha about it. She told Martha that she thought that Martha should reimburse her for the cost of the library fine, since it was Martha who had lost the book. Martha replied that it was Sarah's job as her personal assistant to make sure Martha didn't lose any books, and so it was only right that Sarah should bear the cost. They argued for a long time. After the argument, Martha rang her lawyer and the lawyer advised her that she should reimburse Sarah for the library fine. The next day, Martha reimbursed Sarah $110.

How does the reimbursement impact upon Sarah's ability to claim a deduction for the fine payment?