Question

Discuss briefly, citing sections, whether the following amounts are deductible for the taxpayer
(i) The taxpayer incurred an amount of $1,800 in borrowing charges when applying for finance with WBank.
(ii) The taxpayer paid his accountant $300 in fees. This amount was for the accountant preparing the taxpayer’s income tax return.
(iii) The taxpayer is an employee at a law firm in town. He spends $40 getting a taxi to work as all public transport has been cancelled that day and does not want to be late for a client meeting.
(iv) The taxpayer is an accounting student and incurs $20 in taxi fares for travel between the supermarket where he works during the day as a cashier, and a nightclub where he works selling drinks in the evening.

Answer 1

1 Yes

.If your total borrowing expenses are more than $100, the deduction is spread over five years or the term of the loan, whichever is less. If the total deductible borrowing expenses are $100 or less, they are fully deductible in the income year they are incurred.

$1,800 in borrowing charges to be spread over five years or the term of the loan whichever is less

2. Yes, Allowed as deduction in Tax

.Accounting Fees. You can deduct any accounting fees that you pay for your business as a deductible business expense—for example, fees you pay an accountant to set up or keep your business books, prepare your business tax return, or give you tax advice for your business.

3.Yes

.The taxpayer is an employee at a law firm in town. He spends $40 getting a taxi to work as all public transport has been cancelled that day and does not want to be late for a client meeting.

Yes, Allowed as deduction in Tax

4. Yes, Allowed as deduction in Tax

When can you claim the cost of public transport

• Travelling directly between two separate workplaces. This could be if you have a second job.
• Travelling from your workplace to work meetings or events during work hours.
• Travel expenses incurred on a work related trip (see below).
• Travelling from your home to an alternative workplace if required.
• If you work from home then travel to your workplace for that same employer.
• If you work at more than one location for the same employer, you can claim the cost of travelling between locations.

What public transport expenses can’t you claim

• The cost of travelling to and from your everyday place of work.
• If you run an errand on the way to or from work. Eg. pick up the mail or a package.
• If you work overtime or out of hours.
• Your home is your place of work and you travel to a different location to work for somebody else.