Taxable Income and Deductions
Question 1:
Jane’s salary of $230,000 per year, covering both stand-by duties and normal duties, gives rise to assessable income.1 Nonetheless, her normal travel expenses from home to the place of employment or business are not deductible under Section 8-1 as such costs are not qualified to satisfy the positive limb of the general deductions provisions, that is, they are not sufficiently related to the production of assessable income.2 Rather, the normal travelling expenses are incurred because of a private choice to live somewhere far away from the work place, thus they are not deductible in light of cases like Lunney v FC of T ; Hayley v FC of T.3 However, this is not exactly the same case here. Specifically, Jane could argue on the basis of case like FC of T v Collings4 that her stand-by travelling expenses could be deductible. She is responsible for an emergency case as soon as she receives a phone call. After giving some instructions, she has to drive to the hospital to complete surgery and then return home. In short, the specific travel would be deductible where the travel has technical purpose rather than merely taking a taxpayer to work. Therefore, Jane could be granted of a deduction of $1,700 for her stand-by travel for the 2011-12 income year, representing her travel to and from work outside her normal working hours.5
All in all, Jane could claim for a deduction of her stand-by trip expense of $1,700, but the normal trip cost of $2,800 is not deductible.
[?] Section 6-5.
2 Section 8-1.
3 Lunney v FC of T; Hayley v FC of T (1958) 100 CLR 478.
4 FC of T v Collings 76 ATC 4254.
5 FC of T v Collings 76 ATC 4254.
Question 2:
The apartment Jane purchased to live in is a CGT asset because it is real property,6 and satisfies the definition of dwelling.7 When Jane sold the apartment there was a change of ownership. In addition, Jane got a net capital gain of $160,000 on the sale irrespective of the interest, which triggers the emergence of
Jane’s salary of $230,000 per year, covering both stand-by duties and normal duties, gives rise to assessable income.1 Nonetheless, her normal travel expenses from home to the place of employment or business are not deductible under Section 8-1 as such costs are not qualified to satisfy the positive limb of the general deductions provisions, that is, they are not sufficiently related to the production of assessable income.2 Rather, the normal travelling expenses are incurred because of a private choice to live somewhere far away from the work place, thus they are not deductible in light of cases like Lunney v FC of T ; Hayley v FC of T.3 However, this is not exactly the same case here. Specifically, Jane could argue on the basis of case like FC of T v Collings4 that her stand-by travelling expenses could be deductible. She is responsible for an emergency case as soon as she receives a phone call. After giving some instructions, she has to drive to the hospital to complete surgery and then return home. In short, the specific travel would be deductible where the travel has technical purpose rather than merely taking a taxpayer to work. Therefore, Jane could be granted of a deduction of $1,700 for her stand-by travel for the 2011-12 income year, representing her travel to and from work outside her normal working hours.5
All in all, Jane could claim for a deduction of her stand-by trip expense of $1,700, but the normal trip cost of $2,800 is not deductible.
[?] Section 6-5.
2 Section 8-1.
3 Lunney v FC of T; Hayley v FC of T (1958) 100 CLR 478.
4 FC of T v Collings 76 ATC 4254.
5 FC of T v Collings 76 ATC 4254.
Question 2:
The apartment Jane purchased to live in is a CGT asset because it is real property,6 and satisfies the definition of dwelling.7 When Jane sold the apartment there was a change of ownership. In addition, Jane got a net capital gain of $160,000 on the sale irrespective of the interest, which triggers the emergence of