[The focus of this seminar is Chapter 5 of the Study Guide]

81General deductions

(1)You can deduct from your assessable income any loss or outgoing to the extent that:

(a)it is incurred in gaining or producing your assessable income; or

(b)it is necessarily incurred in carrying on a *business for the purpose of gaining or producing your assessable income.

(2)However, you cannot deduct a loss or outgoing under this section to the extent that:

(a)it is a loss or outgoing of capital, or of a capital nature; or

(b)it is a loss or outgoing of a private or domestic nature; or

(c)it is incurred in relation to gaining or producing your *exempt income or your *nonassessable nonexempt income; or

(d)a provision of this Act prevents you from deducting it.

For a summary list of provisions about deductions, see section125.

(3)A loss or outgoing that you can deduct under this section is called a general deduction.

Question 1

James is employed as a veterinarian with Southside Vet Clinic. During the 2020 income year James incurred the following expenses in relation to his work as an employee of Southside Vet Clinic (note that James incurs similar expenditure every year as the clothing, boots and sunglasses constantly need replacing):

5 pairs of plain khaki work pants @ $70 each$350

1 x industrial Apron for surgery$180

2 pairs of steel-capped safety work boots @ $60 each$120

5 Southside Vet Clinic polo shirts (registered design) @ $30 each$150

Sunscreen used when working outside (estimated 60% relates to work)$100

Laundry expenses for cleaning the surgery apron and polo shirts$280

Weekly Golf fees (due to work stress, James plays golf weekly)$960

Speeding fine received on the way to work to perform a surgery on a cat$400

Are these work-related expenses incurred by James deductible under section 8-1 for the 2020 year?

USE THE STEP GUIDE TO HELP YOU ANSWER THE QUESTION

Give brief reasons and references to the applicable sections of the ITAA36/ ITAA97 in determining whether the following expenses are allowable as a general tax deduction under section 8-1 ITAA97.

(a)$400 incurred for a wound cleaning course undertaken by a nurse at a local Doctors surgery.

(b)Costs associated with setting up a loan to buy machinery for a business. The costs included stamp duty and loan establishment fees for a total amount of $650.

(c)A lawyer takes his client to lunch in the assigned lunch break on the day of a court hearing. During the lunch they discuss how the case is progressing. The total cost of the lunch is $350.

(d)A radio station paid $120,000 as settlement for legal action undertaken by an Australian actress due to defamatory statements made about the actress by one of the radio presenters in an on air telecast of their radio show.