Question

Discuss briefly, citing sections, whether the following are deductible

I. The cost of a golf club membership incurred by an accountant who likes to take clients to play golf each Friday

II. The travel costs incurred by the taxpayer with the identical facts to those in FCT v. Collings (1976).

III. An amount of $5 000 held in a savings account by the taxpayer as he anticipates having to pay long service leave for a staff member in the next financial year.

IV. Borrowing expenses incurred by the taxpayer in relation to a business loan to finance the purchase of a new factory.

About FCT v Collings (1976): expenditure for travel incurred in the course of carrying out employment responsibilities is not a private expenditure and does satisfy the positive limb of s 8-1(1); a taxpayer hopes to use the precedent will have to show that he or she carries out additional responsibilities from home in addition to his or her of carrying out the secondary responsibilities, not to travel to work to carry out the regular o?ceresponsibilities.

Answer 1

1. No,

because taking clients to paly golf is not main the main business of his professional service of accounting. Further Clints cannot be trated as his staff. Hence cost of golf club membership is not deductable.

2. Yes

As per the proceedings of given case expenditure for travel incurred in the course of carrying out employment responsibilities is not a private expenditure and does satisfy the positive limb of s 8-1(1) subject to showing of as additional responsibilities by the taxpayer

3. No

Since saving account is used to deposit moner of personal saving only; not for the purpose of depositing any fund related to any business

4. Yes

because borrowing expenses paid by the taxpayer for the purchse of factory which will be used for the purpose of business