Income Tax Law Essay Example

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Income Tax Law 2

  1. If the child care expenses are incurred by an employee accountant, the amount will not be deductible under s8-1, when computing the taxable amount. However, the employee can apply for child tax offset, in which he/she is given tax refund for the amount spent on the care of the child. This possible under given condition; the child is under age of 5 years, the employee is legally responsible for the child, the child is under employee care and the employee is an Australian resident. This entitlement for tax refund only applies if the child is the first child of the employee.

  2. If the child care expenses are incurred by the employer of the accountant, then the amount incurred will be tax deductible. The child care is exempted from the fringe benefits tax when it is provided for by the business. This would, therefore, mean that an employer can give its employees an alternative to sacrificing the child care fees in the employee is deducted some portion of his salary to cater for the care of the child. The employees will not be subjected to tax on the portion of salary in which they have sacrificed for the care of the child; therefore they gain in the form of tax deductions for the amount they have sacrificed for the care of the child. The main intention of this tax incentive was to encourage employers to be part of employees’ solution to the child upkeep. This will help the employees as well as the government in its policies implementations.

  3. The cost of meals incurred by an employee lecturer who is required to teach after hours is not deductible under s8-1. This is because the employee’s meals under normal working hours are no considered as deductible when assessing individual tax obligations. The lunch allowance which may be paid to the lecturer by the employer is therefore taxable.

  1. If an employee worked over time and incurred some cost in the course of performing his/her duty, then the amount is deductible. In this case, factory employee works overtime given a meal allowance by the employer and the amount paid is recognized under an industrial award. The amount paid to the employee will, therefore, be deductible as it is incurred in the performance of duty outside the normal working hours.

  1. When the employee buys clothing in order to improve its image when selling the company’s, the cost of the clothing is not deductible for the tax purposes. In this case, an employee who is a sales person for the company buys a suite in order to impress the clients and therefore, improve the sales of the company. However, the total cost incurred by the sales person in the purchase of the suite is not deductible since as per the salesperson he/she is required to be presentable when dealing with the clients and hence the cost of buying suite is just normal personal expense required of any professional sales person.

  1. The cost incurred by the police officer who works as «under-cover» to purchase a replacement shirt that is required for the performance of his / her duty is deductible. This is because the police must have that kind of shirt when working and cannot put on any different shirt. The worn out shirt was also destroyed in the course of the employee police executing his duties, hence the cost of shirt purchase will be deductible.

  1. The cost incurred by the army officer short back and the side haircuts for him/her to comply with the laid down regulations are not deductible. This is because it is expected of every army officer to have his side haircuts to comply with the relevant regulations, hence it the no deductible.

  1. The cost incurred in the speech improvement lesson by a barrister who will appear in the court to argue out legal cases is not deductible. This is because it is normal for the barrister to attend speech improvement lesson as part of his / her profession to enable him or her to argue out the cases very well. Therefore, the amount incurred for the speech improvement class should not be deductible.

  1. The cost incurred in the annual subscription to the «The Investor» paid by the shareholder is deductible. This is because payment annual professional magazines are allowed and it will also help the company in the improvement of its activities. So the subscription is for the benefit of the company and hence it is deductible.

  1. The income tax which is paid by either the taxable employee or employer is no deductible. This is the individual taxable amount and the business incomes are different. Hence the amount is not taxable.

2. (a) If the interest charged by him is equal to the interest he will pay to the bank then the interest expense is not deductible. Therefore, it will not be deductible.

(b) If he lends the whole money to the company at an interest-free rate, then the amount will be deductible.

(c) If he charged an interest of 5% per annum to the company, then only the other 5% will be deductible


Federal Registry Legislation, 2017 Australian government. [online]<> <accessed on 24 May 2017>