Question

A landlord owns a flat he leases to tenants. A new tenant pays the landlord before the start of the lease a lump sum of $15,000 as part of the lease negotiations. b. Cheryl owned a warehouse destroyed by a fire. Her insurance company paid her compensation of $500,000 for the loss. c. During the tax year 2016-17 Boris paid his tax agent $500 for the lodgement of his 2015-16 individual income tax return and $800 for the preparation and lodgement of the objection to the 2015-16 assessment. d. James works at a hospital and when he is at work he buys his lunch at the cafe in the hospital. Over the course of a year he spends $2,000. e. Frances started a new business and at the launch of the business she hired a restaurant and invited over one hundred potential clients for the business. The cost of hiring the venue and providing food and drink was $5,000. To support the analysis in your answers refer where appropriate to the ITAA 1936, ITAA 1997, Tax Rulings and/or case law

Answer 1

1)

1. This Ruling explains the circumstances where it is considered that:

• (a) a lease surrender receipt is assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997); and
• (b) a lease surrender payment is deductible under section 8-1 of the ITAA 1997.

2. This Ruling also addresses the application of the provisions of the ITAA 1997 covering capital gains and capital losses (CGT).

3. The table at paragraph 102 of this Ruling cross references the provisions of the ITAA 1997 referred to in this Ruling to the corresponding provisions of the Income Tax Assessment Act 1936 (ITAA 1936). References to provisions of the ITAA 1997 should be read as also including, unless a contrary intention appears, references to corresponding provisions of the ITAA 1936. Cases relied upon in this Ruling that deal with issues in terms of provisions of the ITAA 1936 are considered to have equal application to the corresponding provisions of the ITAA 1997. Legislative references, unless otherwise stated, are to the ITAA 1997.

2)as per section

15-30 Your assessable income includes an amount you receive by way of insurance or indemnity for the loss of an amount (the lost amount) if:

(a) the lost amount would have been included in your assessable income; and

(b) the amount you receive is not assessable as *ordinary income under section 6-5.

3)Can be taken as consultancy fee i.e commissions paid to tax agent for individual tax fililng shall be treated as dis allowed as per 1977 ACT.

4)Meal entertainment--election under section 37AA of Fringe Benefits Tax Assessment Act 1986 to use 50/50 split method

             (1) If a meal entertainment fringe benefit arises for a taxpayer for an FBT year and the taxpayer elects that Division 9A of Part III of the Fringe Benefits Tax Assessment Act 1986 applies to the taxpayerfor the FBT year, and has not elected that Subdivision C of that Division applies:

                     (a) for each expense incurred in the FBT year by the taxpayer in providing meal entertainment, a deduction equal to 50% of that expense is allowable to the taxpayer for the year of income in which it is incurred; and

                     (b) no other deduction under any provision of this Act is allowable to the taxpayer for the expense.

             (2) Expressions used in this section have the same meaning as in the Fringe Benefits Tax Assessment Act 1986 .