UBSS- Assessment 2 (Prepare Report)

Table of Contents

Introduction 2

(a) Travel costs for the job interview in Broken Hill: $400 2

(b) Moving expenses from Sydney to Broken Hill: $2,000 3

(c) Cost of mandatory doctor's uniform: $500 3

(d) Childcare fees for her three-year-old daughter: $25,000 4

(e) Expenses for after-hours phone calls to the hospital: $200 4

(f) Meal costs during evening shifts: $680 5

(g) Speeding ticket incurred en route to work: $115 6

(h) Daily commuting costs: $480 6

Conclusion 7

References 8
Introduction

This report explores the tax implications associated with general deductions as outlined in the

Income Tax Assessment Act 1997 (ITAA 1997). It aims to clarify key tax issues, relevant laws,

and their application to the taxpayer’s expenses. By employing the IRAC framework (Issue,

Rule, Application, Conclusion), this analysis seeks to provide a clearer understanding of the

deductibility of certain expenditures and the factors influencing these decisions.

decisions about their business operations and personal finances.

(a) Travelling to Broken Hill for the job interview: $400

Issue:Is the $400 spent on travel for a job interview in Broken Hill an allowable deduction?

Rule : Section 8 of the ITAA 1997 stipulates that expenses must be incurred in the process of

earning assessable income to be deductible (Killaly, 2023). Expenses incurred while seeking

employment are generally considered personal unless directly linked to current income

production. This principle was reinforced in *FCT v. Maddalena* (1971), where travel costs for

job seeking were deemed non-deductible (General Deductions, 2024).

Application Miss Dundee's travel costs to the job interview occurred before she secured

employment. According to *Maddalena*, these travel expenses are personal in nature and not

directly connected to income generation.

**Conclusion**: The $400 travel expense is not deductible, as it is linked to the job-seeking

process rather than to income production.

### (b) Moving from Sydney to Broken Hill: $2,000

**Issue**: Is the $2,000 spent on relocating to Broken Hill deductible?

**Rule**: Relocation costs are typically considered private expenses under Section 8-1. This

was established in *Lunney v. FCT* (1958), which ruled that moving expenses to secure

employment do not qualify as deductible (Ato.gov.au, 2024).

**Application**: Miss Dundee's relocation was a personal decision to accept a job offer and thus

does not fall within the ambit of income-producing activities. According to *Lunney*, such

expenses are deemed private.

**Conclusion**: The $2,000 moving expense is not deductible.

### (c) Purchase of compulsory doctors’ uniform: $500

**Issue**: Is the $500 spent on a compulsory doctors’ uniform deductible?

**Rule**: Under Section 8-1 and the Taxation Ruling TR 97/12, expenses for uniforms required

for work are deductible if they are specific to the profession (Ato.gov.au, 2011). This was

confirmed in *Morris v. FCT* (2002), where the court ruled that uniform costs for nurses were

deductible as they met the criteria of being unique to the profession (Ato.gov.au, 2024).

**Application**: The purchase of the doctors' uniform is specific to Miss Dundee's role and is

mandated by her employer, fulfilling the criteria for deductibility under TR 97/12.

**Conclusion**: The $500 expense for the uniform is deductible.

### (d) Childcare expenses for her three-year-old daughter: $25,000

**Issue**: Are the childcare expenses of Miss Dundee's daughter deductible?

**Rule**: Childcare expenses are generally classified as private or domestic. Section 1-8 does

not allow for these expenses to be deducted. In *Lodge v. FCT* (1972), childcare costs were
ruled non-deductible as they do not relate to income production (Law.uq.edu.au, 2016).

**Application**: Despite being essential, childcare expenses lack a sufficient link to Miss

Dundee's income-generating activities, as established in *Lodge*.

**Conclusion**: The $25,000 childcare expense is not deductible.

### (e) Cost of telephone calls to the hospital after hours: $200

**Issue**: Are the $200 telephone calls made for work deductible?

**Rule**: Telephone expenses incurred for work purposes are deductible under Section 8-1.

According to Taxation Ruling TR 93/30, such expenses are necessary for income production

(ATO, 2023). The case *R13 84 ATC 168* illustrates that work-related calls can qualify as

deductible expenses (Croker et al., 2019).

**Application**: Miss Dundee’s calls to check on patients after hours are essential for her

duties, directly benefiting her role and enhancing service quality.

**Conclusion**: The $200 expense for telephone calls is deductible.

### (f) Purchase of meals while working evening shifts: $680

**Issue**: Are the meals purchased during evening shifts deductible?

**Rule**: Meals are typically classified as private expenses unless incurred while traveling for

work. Taxation Ruling TR 2020/1 states that even employer-supported meals are often

considered personal unless closely linked to work activities (ATO, 2020). In *FCT v. Cooper*
(1991), meal expenses during work were deemed non-deductible due to lack of connection to

income production (Jade, 2020).

**Application**: Although Miss Dundee purchased meals during her shifts, these expenses do
not connect directly to her income-generating activities, aligning with the principles established

in *Cooper*.

**Conclusion**: The $680 spent on meals is not deductible.

### (g) Speeding fine incurred on the way to work: $115

**Issue**: Is the speeding fine deductible?

**Rule**: Under Section 26-5 of the ITAA 1997, fines incurred for legal violations are not

deductible (Commonwealth Consolidated Acts, 2024). The case *Hatchett v. FCT* (1971)

confirmed that fines from illegal activities do not qualify for deductions (Taxbanter, 2022).

**Application**: Miss Dundee’s speeding fine resulted from a violation of traffic laws and does

not relate to her income-generating activities.

**Conclusion**: The $115 speeding fine is not deductible.

### (h) Travel to and from work: $480

**Issue**: Can the $480 spent on commuting be deducted?

**Rule**: Travel expenses for commuting between home and work are generally

non-deductible. Taxation Ruling TR 95/34 clarifies that such expenses do not qualify under

income tax deductions (ATO, 2021). The High Court’s decision in *Hayley and Lunney v. FCT*

(1958) supports this principle (ATO, 2024).

**Application**: Miss Dundee’s commuting costs are private and do not fall within the criteria

for deductible expenses outlined in *Lunney*.

**Conclusion**: The $480 commuting expense is not deductible.

## Conclusion

In conclusion, the assessment of Miss Dundee's expenses reveals that only the cost of the

compulsory doctors’ uniform and work-related telephone calls qualify as deductible under the

ITAA 1997. Other expenditures, including travel for job interviews, relocation costs, childcare

expenses, meal purchases, fines, and commuting costs, are classified as private and

non-deductible. This analysis underscores the critical distinction between work-related and

personal expenses in determining tax deductibility.

## References

ATO. (2020). TR 2020/1 - Income tax: employees: deductions for work expenses under section

8-1 of the Income Tax Assessment Act 1997. Ato.gov.au.

https://www.ato.gov.au/law/view/document?DocID=TXR/TR20201/NAT/ATO/
00001&PiT=999

ATO. (2021). TR 95/34 - Income tax: employees carrying out itinerant work - deductions,

allowances and reimbursements for transport expenses. Ato.gov.au.

https://www.ato.gov.au/law/view/document?DocID=TXR/TR9534/NAT/ATO/00001

ATO. (2023). TR 93/30 - Income tax: deductions for home office expenses. Ato.gov.au.

https://www.ato.gov.au/law/view/document?docid=TXR/TR9330/NAT/ATO/00001

ATO. (2024). IT 2217 - INCOME TAX DEDUCTIONS: MEDICAL APPLIANCES.

Ato.gov.au.
https://www.ato.gov.au/law/view/document?docid=ITR/IT2217/NAT/ATO/00001

Ato.gov.au, TR 97/12 - Income tax and fringe benefits tax: work-related expenses: deductibility
of expenses on clothing, uniform and footwear. (2011). Ato.gov.au.

https://www.ato.gov.au/law/view/document?Docid=TXR/TR9712/NAT/ATO/00001

Commonwealth Consolidated Acts. (2024). INCOME TAX ASSESSMENT ACT 1997 - SECT

26.5 Penalties. Austlii.edu.au. https://classic.austlii.edu