LAWS3101 Study Guide - Midterm Guide: Capital Asset
Document Summary
Usually expenses that are denied deductions are not deductible for policy reasons, such as where the government does not want to reward or promote certain types of behaviour. Some examples of expenses that are not deductible for tax purposes are: Particularly, entertainment expenses are not deductible under div 32 of itaa 1997 section 32-5. Division 32 of the itaa97 deals with entertainment. The division is detailed and contains many exceptions. But, since there is a very strong link between division 32 and fringe bene ts tax, you must become familiar with the detailed rules, some of which will be explained in greater detail here. First, there is a wide prohibition against claiming entertainment expenses as a deduction. This also means that if you purchase a capital asset that you use for entertainment, you also can"t claim capital allowances in relation to that asset. You can"t argue that entertainment costs are related to, and perhaps even necessary for your business.
