CLAW3201 Study Guide - Brewery, Legal Personality, Bass Strait
17 pages86 viewsFall 2015
Taxation law – Final
(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 *
non-assessable non-exempt income; or
oLogical: is outgoing related to that income generating activity?
oTemporal: before, during and after
-A deduction must be incurred
oLegal obligation to pay – positively committed
- Apportionment; in both positive and negative limbs
-Approach to answer questions
1. Who is the tax payer – what is the business
2. Is it a loss or outgoing – what is the outgoing
3. Was it incurred in producing assessable income
Apportionment of expenditure – ronpibon tin
No limits on deductions – cecil bros and fct v
No necessity for matching – herald & weekly
Expenditure must be incurred in gaining/
producing assessable income
-Fct v maddalena
-Sprigs v fct
-Fct v riverside road
-Steele v dct
-Fct v brown
-Fct v jones
-W Neville & co
-Fct v snowden
-Fct v total holdings
-Ure v FCT
-Fletcher v FCT
-FCT v Ashwick
-Putnin v FCT
-FCT v Day
-Creer v FCT
Losses and outgoings of capital or of a
-Once and for all test
-Enduring benefit test
-FCT v Consolidated fertilizers
-Kemp v FCT
-Nat Aus Bank v FCT
-CityLink Melb v FCT
Capital protected loans – st George bank
Losses and outgoings of a private or
-Handley v FCT
-FCT v Forsyth
-FCT v Cooper
-FCT v Edwards
-Mansfield v FCT
-FCT v Payne
-Morris v FC
W Neville & Co: pays a ceo to retire in a joint manager situation on the board
Held – Deductible
-Don’t need to show expense earnt money
-Business 1(b) incurred in running a business
Charles Moore & Co: retailer gets robbed banking funds.
Held – Deductible because it is logical that the risk could happen and banking is connected to
running a business
Putnin: TP wanted to defraud the commonwealth, he claimed a deduction for legal expenses
relating to his defence.
Held – deductible because similarly to herald weekly because may have been protecting his
Creer v FCT: taxpayer was a partner and the firm expelled him.
Held – deductible because related to the restoration of the taxpayers income entitlement
FCT V Day: a public servant (customs officer) whose employment was set by an act of
parliament. They took action under parliament so that he would either be sacked or have a
reduced pay. Day spent money defending himself.
Held – deductible because he is seeking to keep his job. In the course of gaining / producing =>
keeping his job
FCT v Anstis: study allowance was paid and a series of requirements need to be met ie grades.
She said it was her assessable income. Also worked a casual job, two sets of income.
Held – deductible by (a) because given that her pay is income
-Was the expenses incurred in gaining or producing?
oIf she didn’t buy textbook – pass – not get paid
oTherefore it is in the course of g/p
oShe didn’t earn the allowance though – she gained it??
-An exceptional case so they changed the law after this
Cecil Brothers: No prudent taxpayer test of how much ought to be spent. Court doesn’t care if it’s
a good or a bad deal.
Magna Alloys: directions are charged with criminal offences by the government. Magna
funds/suppose their defence of those charges.
Held – deductible bc of nexus to the taxpayers business
1. Whats the business
2. Whats the issue? What are you protecting by paying directors legal fees? – like an
advertisement, you want good name -> Deduction
Snowden: legal expenses for goodwill threatened and future income earning capacity – Protect of
how they do the thing.
Held – deductible because could do nothing else but defend themselves and was not capital
La Rosa: Drug money, someone dig up your money and take it whilst you are in jail
Held – Deductible because
-What is the business: drug importation
-Is there logical nexus: criminals hide money and yes there is chance of it being stolen
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