Income taxation Law Essay Example

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Question 1

Allowable expenses are those which are incurred wholly and exclusively in generating income for the business;

  1. tenants are not deductible for the tax purposes. This is because the expenses are not wholly and exclusively incurred for the purpose of obtaining rental income. The landlord should seek compensations from the tenant to pay for the damages for the expenses incurred to patch a hole in the wall. The landlord should, therefore, charge the tenants an extra of $ 100 for the damages they have caused.
    Expenses incurred to patch a hole in a wall that had been caused by

  2. tenants of $500 are no allowable deduction for the tax purposes. This is expense not wholly and exclusively incurred to improve the rental property. A number of damages caused by the tenants should be passed to them, and therefore, the landlord will not claim for deduction on these expenses.
    Expenses incurred by the landlord to replace lounge room carpet that had been damaged by

  3. down is allowable deduction expense. The replacement of the hot water service that has broken serves to improve the facility, and therefore attract more tenants if there is still available space or retain the existing tenants and make their stay in the rental premises comfortable. Therefore, Robert should claim a deduction on these expenses of $ 900 since he incurred wholly and exclusively on the rental houses to improve their conditions.
    Expenses incurred to replace the hot water service that had

  4. conditioner are the claimable deduction. Installing a wall unit condition would help improve the rental houses and attracts the tenants. The expense is wholly and exclusively used to improve the rental houses to generate more rental income. Hence they are the allowable deduction. Robert will, therefore, claim the deduction of $ 1,000.
    Expenses incurred to install a wall unit

Question 2

  1. The purchase price of $ 100,000 of the computer games and hardware will not be allowable since it is bought for resale. However, the goodwill attached to the purchase of computer games and equipment will be allowable as capital deduction.

  2. goodwill will be allowable deduction expense since it is incurred in facilitating the purchase of the computer games and hardware together with the goodwill hence Peter will claim it and therefore reduce the tax claim.
    consisting of all computer games and hardware
    The Stamp duty on the transfer of the business assets,

  3. name are deductible expenses since it is incurred for the new business.
    Legal costs of arranging the transfer of the business

  4. years is allowable expense and Peter should, therefore, claim it
    the business premises that has a lease period of
    Expenditure on legal costs for preparing a new lease of

  5. years. This is also allowable deduction, and therefore, Peter will claim a deduction on this expense.
    the purchase by a loan that has a loan period of
    Expenditure on bank fees for borrowing money to finance

  6. The rent paid in advance for January 2017 is also allowable expense since it is incurred in the process of generating revenue for the firm. Hence Peter should claim deductions on the amount paid as advance rent.

Question 3

The traveling expenses are allowable if incurred by employees exclusively, wholly and necessarily for the performance of duties to the benefit of the company. Traveling expenses incurred by an employee to travel to another place to work for the company is allowable.

  1. home are not an allowable expense. This is because the shop assistant traveling from the place of the full employment and to home is not for the purpose of the business part for his personal gain. He will therefore not claim that traveling allowance. Again traveling home is normal for any employee and therefore, will not be tax deductible.
    from their place of full-time employment to a part-time job and then to
    Expenses of a non-capital nature incurred by a shop assistant in traveling

  2. The non-capital expenditure incurred by Arthur in traveling to various venues is tax deductible. This is because the traveling to listen to tapes of various symphonies to psyche him up to give the best possible performance is part of expenses which will help him to improve his performance. The expense is, therefore, part of his career improvement in relation to the job he is undertaking, hence the amount is deductible.


The first thing is that Marie can claim the capital allowance of his car which is of class C. Marie will also claim all expenses related to the business travel which is 75% of the total traveling. He will claim expenses lease payments, registration, and insurance.