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Explain the rationale behind deductions and discuss why nexus to earning income is central to claiming...

Explain the rationale behind deductions and discuss why nexus to earning income is central to claiming general deductions. How do specific deductions differ in this regard? Give examples. Should deductions be capped to what are reasonable expenses rather than actual expenses? Can you think of an example of such a restriction under the ITAA97.

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Answer #1

DEDUCTIONS

A TAX DEDUCTION IS A DEDUCTION THAT LOWERS A PERSON'S TAXLIABILITY BY LIWERING HIS TAXABLE INCOME.DIDUCTIONS ARE TYPICALLY EXPENCES THAT INCURES DURING THE YEAR THAT CAN BE APPLIED AGAINEST OR SUBSTRACTED FROM HIS INCOME IN ORDER TO FIGURE OUT HIS TAX

A GENERAL DEDUCTION IS THE LOSS AUTGOING THAT HAS A RELEVENT CONNECTION WITH INCOME PRODUCING ACTIVITIES

LIKE BUSINESS AND INVESTMENT ACTIVITIES

SPECIFIC DEDUCTION MEANS IT CAN BE USE ONLY FULFILL SPECIFIC CONDITIONS AS PER THE LAW LIKE SPECIFIC INVESTMENT ON GOVERMENT PROJECTS ETC

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