In: Accounting
Sally is a single parent who is employed as an accountant. In order to attend employment she must put her young child in a day-care centre. Sally considers the expense is necessarily incurred in gaining her income. Would she be entitled to a tax deduction under s8-1? Required Advise Sally of her tax consequences.
You shoud follow Issue, Law, Application , Conclusion (ILAC) model
Issue- |
Whether Sally will be allowed deduction for the Day-care expense of her Child under Section 8-1. |
Law- |
As per the provision of Section 8-1 of the ITAA- |
(1) You can deduct from your assessable income any loss or outgoing to the extent |
that: |
(a) it is incurred in gaining or producing your assessable income; or |
(b) it is necessarily incurred in carrying on a business for the purpose of |
gaining or producing your assessable income. |
However, deduction is not allowed in the following cases |
(a) if it is loss or Outgoing of capital, or of a Capital Nature |
(b) If it is of private or domestic nature |
(c) it is incurred in relation to gaining or producing your exempt income or your |
non-assessable non-exempt income; or |
(d) a provision of this Act prevents you from deducting it. |
Application- |
In the given case Sally has incurred outgoing for the purpose of gaining her income. There fore the section is applicable to this case. |
But the outgoing incurred i.e. The day care center expense for her child is of private or Domestic nature. |
this is covered under the deduction not allowed section. |
Conclusion- |
Sally will not be allowed a deduction for the Day care center expense of her child under Section 8-1 of the ITAA as this outgoing is a private or Domstic nature. |
Note- |
Best effort have been made to answer the question correctly, in case of any discrepencies kindly comment and i will try to resolve it as soon as possible. |
Please provide positive feedback. |