Merry is a chef. She runs her own restaurant business. During the year, Merry incurred the...

Merry is a chef. She runs her own restaurant business. During the year, Merry incurred the following expenses.

Advise Merry as to whether the expenses below would be deductible for income tax purposes.

- A. B. C.	salary costs to casual employees of $50,000
- A. B. C.	salary costs of $2,000 to her sister (the amount is excessive, compared to the same job performed by others)
- A. B. C.	travel costs of $8,000 for travel from her home to her restaurant
- A. B. C.	$12,000 on protective clothing like spectacles and gloves for herself and staff
- A. B. C.	$3,000 on a course which educates her about a new cuisine that she can add to her restaurant menu

Solutions

Expert Solution

a.) salary costs to casual employees of $50,000 - FULLY DEDUCTIBLE

b.) salary costs of $2,000 to her sister (the amount is excessive, compared to the same job performed by others) - NON-DEDUCTIBLE

c.) travel costs of $8,000 for travel from her home to her restaurant - FULLY DEDUCTIBLE

d.) $12,000 on protective clothing like spectacles and gloves for herself and staff - FULLY DEDUCTIBLE

e.) $3,000 on a course which educates her about a new cuisine that she can add to her restaurant menu - FULLY DEDUCTIBLE

ekkarill92 answered 2 years ago

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