Question

Question 10 Tax administration

1. In October 201W Robert Tinte, an artist, travelled to Brussels for an art exhibition. After the exhibition he remained in Brussels for 5 days to visit friends. The total travel expenses were $8,000, which he claimed in full in his 201W-1X income tax return as a work-related deduction. In September 201X, Anna Blanche, who is also an artist and is friends with Robert, advised him that she had been audited by the ATO in relation to her work-related travel expenses. Robert is now worried that he might be audited and asks for your advice on what to do.

Required

2. Advise Robert on the best course of action in dealing with the ATO in the circumstances described above and explain the tax consequences if he takes no action.                                                                                                                                                                            

Answer 1

You can deduct travel expenses paid or incurred in connection with a temporary work assignment away from home. ... Deductible travel expenses while away from home include, but aren't limited to, the costs of: Travel by airplane, train, bus or car between your home and your business destination.

Your travel expenses are limited to 2% of your adjusted gross income (AGI). If you have an employer, your unreimbursed and allowable travel expenses (those mentioned above) will be reported on Form 2106 or Form 2016-EZ. They are carried forward to Form 1040, Schedule A.

On a business trip, you can deduct 100% of the cost of travel to your destination, whether that's a plane, train, or bus ticket. If you rent a car to get there, and to get around, that cost is deductible, too

if he did not take any action then he might be not allowed to claim any deduction in respect to the expenses met by him .so that if he propoerly audited his books of accounts and he can claim 100% of exp as deduction