Trading Stock How are purchases and sales of trading stock treated for taxation purposes? What impact does
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Trading Stock
- How are purchases and sales of trading stock treated for taxation purposes?
- What impact does a change in trading stock levels between the start and end of an income year have on your taxable income?
- What are your options in valuing closing stock for taxation purposes?
- Can you change your valuation mechanism for closing stock from year to year?
- What is the relationship between opening stock in tax year 1 and opening stock in tax year 2?
- What is the relationship between closing stock in tax year 1 and opening stock in tax year 2?
General Deductibility
- The ITAA 97 contains two principal provisions governing deductibility. What are they?
- What are the two (2) positive limbs of s.8-1?
- What is the difference between the situations in which the first positive limb applies and the situations in which the second positive limb applies?
- What are the four (4) negative limbs of s.8-1?
- Explain when each of the four negative limbs will operate to deny deductibility?
- If you are looking for a provision denying deductibility to an outgoing (under the 4th negative limb) where would you look for it?
- In general terms it can be said that there are three (3) 'classes' of provision in the ITAA that deal with the question of deductibility. What are they?
- What is the role of Div 12?
- Briefly explain the 'essential character test' for classification of outgoings.
- What other tests are used to classify losses and outgoings as either deductible or not deductible? How do those tests operate?
- A competition body builder is placed on a high protein and carbohydrate diet by his coach. To what extent, if at all, are the costs of his dietary requirements deductible against his income as a professional bodybuilder?
Deductibility of Specific Expenses
- To what extent, if at all, are the following expenses deductible against assessable income:
(a) travel expenses between home and work;
(b) travel expenses between two places of employment;
(c) the costs of leaving one's children in child care while one is at work;
(d) self education expenses;
(e) home office expenses;
(f) work related clothing;
(g) fines and penalties;
(h) prepaid expenses.
- To what extent, if at all, is HECS deductible?
- What is the practical effect of s 82A of the ITAA 1936?
- G spends $200 entertaining potential clients at dinner. To what extent, if at all, is this amount deductible?
Apportionment and Dissection of Expenses
- What provision of the ITAA gives the Commissioner power to apportion an expense between income earning and non-income earning activities so that only part of it is deductible?
- What is the difference between apportionment and dissection of a loss or outgoing?
- If an expense cannot easily be apportioned between its deductible and non-deductible components how is it treated for income tax purposes? Provide authority?
- What principles govern the Commissioner's apportionment power?
'Incurred'
- When is an expense considered to have been 'incurred'?
- What is the meaning of 'necessarily' in the context of 'necessarily incurred' in s 8-1(1)(b)? Provide authority.
- Briefly explain the following 'tests' - used to determine whether an expense is on revenue or capital account:
(a) the 'once and for all' test;
(b) the 'enduring benefit' test;
(c) the 'fixed vs circulating capital' test;
(d) the 'business entity' test.
- What will expenditure be 'of a private or domestic nature'?
Related Book For
Financial Statement Analysis
ISBN: 978-0078110962
11th edition
Authors: K. R. Subramanyam, John Wild
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