Under the scheme of computation of total income under the Income Tax Act, the income falling under each head is to be computed as per the relevant provisions of the Act relating to computation of income under that head.
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Construction Seminar Tax and Audit TipsBobby Bragg
This document summarizes a presentation on tax tips and traps for construction contractors. It discusses construction accounting methods, maximizing depreciation deductions, the domestic production activities deduction, and entertainment/per diem deductions and recordkeeping. It provides tips on using these tax strategies effectively and warns of potential limitations and pitfalls to watch out for. The presentation was given by Kim Smith and other tax professionals at Jackson Thornton & Marcus LLC, an accounting firm providing tax and consulting services to construction contractors.
The document discusses various types of deductions that can be taken when filing income taxes. It covers deductions that are subtracted from adjusted gross income, including itemized deductions and expenses from self-employment. It also discusses deductions that can be taken for business use of a home office and for entertainment expenses related to conducting business. Examples are provided to illustrate how to calculate deductions.
1. Capital gains tax is levied on profits from the sale of capital assets such as property, stocks, or other assets held for over a year. There are two types of capital gains: short-term gains taxed at ordinary income rates and long-term gains taxed at lower capital gains rates.
2. Some key exemptions from capital gains tax include reinvesting proceeds from selling a primary residence into another home under Section 54, reinvesting into specified infrastructure bonds under Section 54EC, and selling agricultural land and reinvesting into similar land under Section 54B.
3. Income from other sources includes various types of passive income like dividends, interest, rental income, lottery winnings,
This document provides details on preparing profit and loss accounts and balance sheets. It begins by defining key accounting concepts like revenue, expenses, net profit, and the difference between cash basis and accrual basis accounting. It then explains the purpose and preparation of key financial statements like the trading account, profit and loss account, and balance sheet. The trading account is used to calculate gross profit/loss, while the profit and loss account calculates net profit/loss. The balance sheet presents the financial position of a business on a given date by listing assets, liabilities, and capital. Manufacturing accounts are also discussed for businesses that manufacture goods.
The document discusses various types of losses under the Indian Income Tax Act and how they can be set off and carried forward. It explains that a business loss of Rs. 200,000 can be set off against business profits of Rs. 500,000, resulting in taxable income of Rs. 300,000. It also discusses setting off losses from different heads of income, such as setting off a net business loss of Rs. 220,000 against house property income of Rs. 510,000, leaving taxable income of Rs. 290,000. The document outlines the different types of losses that can be carried forward and the number of years they can be carried forward.
This document discusses the rules for setting off losses from one source or head of income against profits from another in India. It explains that losses can be set off either intra-source (within the same head) or inter-source (across heads), with some exceptions. Unabsorbed losses and depreciation can be carried forward for future set-off for up to 8 years for regular business losses and 4 years for speculative business and race horse losses. The order of set-off is outlined as current year depreciation, then business losses, then unabsorbed depreciation.
The document provides an overview of key aspects of the Direct Taxes Code Bill, 2009 in India, including rates of tax, definitions, scope of total income, tax deduction at source, and areas of direct tax covered. It discusses the classification of sources of income under the new bill such as income from house property, employment, business, capital gains, and residuary sources. It also covers proposals related to maintenance of accounts, computation of taxable income from various sources, tax incentives, and tax deductions.
Construction Seminar Tax and Audit TipsBobby Bragg
This document summarizes a presentation on tax tips and traps for construction contractors. It discusses construction accounting methods, maximizing depreciation deductions, the domestic production activities deduction, and entertainment/per diem deductions and recordkeeping. It provides tips on using these tax strategies effectively and warns of potential limitations and pitfalls to watch out for. The presentation was given by Kim Smith and other tax professionals at Jackson Thornton & Marcus LLC, an accounting firm providing tax and consulting services to construction contractors.
The document discusses various types of deductions that can be taken when filing income taxes. It covers deductions that are subtracted from adjusted gross income, including itemized deductions and expenses from self-employment. It also discusses deductions that can be taken for business use of a home office and for entertainment expenses related to conducting business. Examples are provided to illustrate how to calculate deductions.
1. Capital gains tax is levied on profits from the sale of capital assets such as property, stocks, or other assets held for over a year. There are two types of capital gains: short-term gains taxed at ordinary income rates and long-term gains taxed at lower capital gains rates.
2. Some key exemptions from capital gains tax include reinvesting proceeds from selling a primary residence into another home under Section 54, reinvesting into specified infrastructure bonds under Section 54EC, and selling agricultural land and reinvesting into similar land under Section 54B.
3. Income from other sources includes various types of passive income like dividends, interest, rental income, lottery winnings,
This document provides details on preparing profit and loss accounts and balance sheets. It begins by defining key accounting concepts like revenue, expenses, net profit, and the difference between cash basis and accrual basis accounting. It then explains the purpose and preparation of key financial statements like the trading account, profit and loss account, and balance sheet. The trading account is used to calculate gross profit/loss, while the profit and loss account calculates net profit/loss. The balance sheet presents the financial position of a business on a given date by listing assets, liabilities, and capital. Manufacturing accounts are also discussed for businesses that manufacture goods.
The document discusses various types of losses under the Indian Income Tax Act and how they can be set off and carried forward. It explains that a business loss of Rs. 200,000 can be set off against business profits of Rs. 500,000, resulting in taxable income of Rs. 300,000. It also discusses setting off losses from different heads of income, such as setting off a net business loss of Rs. 220,000 against house property income of Rs. 510,000, leaving taxable income of Rs. 290,000. The document outlines the different types of losses that can be carried forward and the number of years they can be carried forward.
This document discusses the rules for setting off losses from one source or head of income against profits from another in India. It explains that losses can be set off either intra-source (within the same head) or inter-source (across heads), with some exceptions. Unabsorbed losses and depreciation can be carried forward for future set-off for up to 8 years for regular business losses and 4 years for speculative business and race horse losses. The order of set-off is outlined as current year depreciation, then business losses, then unabsorbed depreciation.
The document provides an overview of key aspects of the Direct Taxes Code Bill, 2009 in India, including rates of tax, definitions, scope of total income, tax deduction at source, and areas of direct tax covered. It discusses the classification of sources of income under the new bill such as income from house property, employment, business, capital gains, and residuary sources. It also covers proposals related to maintenance of accounts, computation of taxable income from various sources, tax incentives, and tax deductions.
Cash flow statement showing movement of cash from operating, investing and financing activity, for B Com students based on Goa University B Com syllabus.
This document discusses the importance of accounting adjustments for financial analysis. It notes that adjustments like depreciation, provisions, revaluations must be accounted for to get an accurate picture of a company's finances. Examples are given of common adjustments that may need to be made for items like buildings, furniture, investments, debtors, and in cases of mergers and acquisitions. The document cautions that accountants may "window dress" through various accounting adjustments to inflate assets and profits, so careful analysis is needed to understand the real financial situation.
This document discusses common TDS violations found during surveys conducted by the Income Tax Department. It outlines several types of common violations:
1) Non-deposition of taxes deducted, which is often seen in struggling businesses.
2) Failure to apply the normal deduction rates, as seen in an insurance business.
3) Failure to make any TDS deductions for a TPA (third party administrator) business.
4) Not treating non-refundable rent advances as attracting TDS under section 194I.
5) Misclassifying professional fees paid to guest lecturers as salary.
The document provides guidance on purpose, selection, operation, and procedures for conducting TDS surveys
The document discusses various concepts related to income tax law in Australia including:
- Definitions of income, ordinary income, statutory income, and income from personal exertion or property.
- Whether certain payments such as gifts, prizes, and compensation payments constitute income or capital.
- The Fringe Benefits Tax regime including how fringe benefits are taxed and calculated.
This standard outlines the accounting treatment and disclosure requirements for investment property. It defines investment property as property held to earn rentals or for capital appreciation rather than for short-term sale or use in production. The standard specifies that investment property is initially recognized at cost and can be subsequently measured using either the cost or fair value model. It also provides guidance on transfers to or from investment property, disposal of investment property, and impairment of investment property. Extensive disclosure requirements are specified regarding investment property balances, fair values, rental income and expenses, and restrictions.
Nonprofit Finance: Basics for the non-MBA, non-CPA professionalDonorPath
The document provides an overview of finance basics for non-profits, focusing on financial statements and the roles of cash, credit, and investment. It discusses the three main financial statements - balance sheet, income statement, and statement of cash flows. It explains key elements of the balance sheet and income statement, including assets, liabilities, net assets, revenues, expenses, and changes in net assets. The presentation aims to help non-finance professionals understand and interpret their organization's financials and tell its financial story as it relates to its mission.
The document provides information about preparing a cash flow statement, including:
1) It defines key terms like cash, cash equivalents, and explains the objectives and uses of a cash flow statement such as for short-term financial planning and dividend decisions.
2) It outlines the three categories of cash flows - operating, investing, and financing activities - and provides examples of cash inflows and outflows for each.
3) It presents the standard format for a cash flow statement with sections for the three categories of cash flows.
Consumer protection is a group of laws and organizations designed to ensure the rights of consumers as well as fair trade, competition and accurate information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors
HelpWithAssignment.com is an online tutoring company. Our network spans 3 continents and several countries. We offer three kinds of services: Assignment Help, Thesis Help and Online Tuitions for students in their college or university
Performance Appraisal in Human Resources from HelpWithAssignment.comHelpWithAssignment.com
Performance appraisal systems take various forms and are central to performance management. Traditionally, appraisals occur annually between managers and employees, but trends are changing the style to be more dynamic with periodic reviews. The objectives should remain relevant and achievable to allow for relationship building and coaching. Performance appraisals aim to evaluate performance, identify training needs, motivate employees, and develop individuals through feedback. There are different orientations and types of appraisals such as self, peer, upward, and multi-dimensional appraisals involving feedback from various sources.
Discusses about biomedical microdevices, systems and its various applications such as miniaturized systems including microelectronics, MEMS, microfluidics and nanosystmes measured in microns and nanometers.
Brand equity refers to the intangible value associated with a brand name and the loyalty and perception it holds. It is influenced by factors like goodwill, quality, and price. Brands are valuable assets that can increase a company's financial value. There are three ways to measure brand equity: financially by price premiums, through brand extensions, and based on consumer attitudes and experiences. Building brand equity requires introducing the product with quality, making the brand memorable, and maintaining a consistent image over time through marketing mix elements like quality, price, and distribution.
This document discusses internal controls for computerized accounting information systems. It describes general controls that apply across systems, such as policies for access, backup procedures, and segregation of duties. It also discusses application controls that operate within specific systems or processes to ensure proper authorization, recording, completeness and accuracy of transactions. Examples provided include input and output edit checks, sequence checks, and comparison of control totals. Threats to internal controls like fraud or system errors are also mentioned.
This document discusses key concepts in finance including present value, future value, compound interest, risk and return, insurance, diversification, and asset valuation. It explains that present value allows comparison of sums over time by discounting future cash flows. Risk-averse individuals use insurance and diversification to manage risk. The value of an asset depends on expected future cash flows discounted at the appropriate interest rate. The efficient markets hypothesis suggests that asset prices already reflect all available public information, making it difficult to "beat the market".
This document discusses key concepts in finance including present value, future value, compound interest, risk and return, insurance, and diversification. It provides examples to illustrate concepts such as how present value can be used to compare cash flows over time. It also discusses why people are generally risk averse and how insurance and diversification allow people to manage risk. The document suggests that an asset's value depends on factors like expected future cash flows, and notes that the efficient markets hypothesis posits that asset prices reflect all available public information, making it difficult to outperform the market.
Never worry about accounting homework again, because our professionals are here! Our account service comes with a team of professionals who are more than ready to take on your assignment just log on to http://www.helpwithassignment.com/accounting-assignment-help
This document discusses various thin film processing techniques used in microsystems technologies. It covers topics such as microfabrication techniques including photolithography, etching, and bonding. It also discusses additive thin film deposition methods like oxidation, chemical vapor deposition, physical vapor deposition, sputtering and evaporation. Subtractive thin film processes like wet and dry etching of materials are also covered. Sacrificial layer processes, electrodeposition, electroforming and other inorganic material processes are summarized as well.
The document provides guidance for developing a successful research design and plan. It emphasizes establishing supervision arrangements and timelines, conducting a thorough literature review to establish critical knowledge in the field, and determining the appropriate research methodology whether qualitative, quantitative, or mixed. It stresses the importance of obtaining access to required data and keeping the research question and focus narrow.
Discusses about Microsystems Technologies,micromachining,polymer techniques,photolithography and mask design, wet and dry bulk etching, bonding, thin film deposition and removal, metallization, sacrificial processes, other inorganic processes, electroplating,polymer materials and basics, thick-film polymers, soft lithography and multiple methods of micromolding, stereolithography, LIGA
Cash flow statement showing movement of cash from operating, investing and financing activity, for B Com students based on Goa University B Com syllabus.
This document discusses the importance of accounting adjustments for financial analysis. It notes that adjustments like depreciation, provisions, revaluations must be accounted for to get an accurate picture of a company's finances. Examples are given of common adjustments that may need to be made for items like buildings, furniture, investments, debtors, and in cases of mergers and acquisitions. The document cautions that accountants may "window dress" through various accounting adjustments to inflate assets and profits, so careful analysis is needed to understand the real financial situation.
This document discusses common TDS violations found during surveys conducted by the Income Tax Department. It outlines several types of common violations:
1) Non-deposition of taxes deducted, which is often seen in struggling businesses.
2) Failure to apply the normal deduction rates, as seen in an insurance business.
3) Failure to make any TDS deductions for a TPA (third party administrator) business.
4) Not treating non-refundable rent advances as attracting TDS under section 194I.
5) Misclassifying professional fees paid to guest lecturers as salary.
The document provides guidance on purpose, selection, operation, and procedures for conducting TDS surveys
The document discusses various concepts related to income tax law in Australia including:
- Definitions of income, ordinary income, statutory income, and income from personal exertion or property.
- Whether certain payments such as gifts, prizes, and compensation payments constitute income or capital.
- The Fringe Benefits Tax regime including how fringe benefits are taxed and calculated.
This standard outlines the accounting treatment and disclosure requirements for investment property. It defines investment property as property held to earn rentals or for capital appreciation rather than for short-term sale or use in production. The standard specifies that investment property is initially recognized at cost and can be subsequently measured using either the cost or fair value model. It also provides guidance on transfers to or from investment property, disposal of investment property, and impairment of investment property. Extensive disclosure requirements are specified regarding investment property balances, fair values, rental income and expenses, and restrictions.
Nonprofit Finance: Basics for the non-MBA, non-CPA professionalDonorPath
The document provides an overview of finance basics for non-profits, focusing on financial statements and the roles of cash, credit, and investment. It discusses the three main financial statements - balance sheet, income statement, and statement of cash flows. It explains key elements of the balance sheet and income statement, including assets, liabilities, net assets, revenues, expenses, and changes in net assets. The presentation aims to help non-finance professionals understand and interpret their organization's financials and tell its financial story as it relates to its mission.
The document provides information about preparing a cash flow statement, including:
1) It defines key terms like cash, cash equivalents, and explains the objectives and uses of a cash flow statement such as for short-term financial planning and dividend decisions.
2) It outlines the three categories of cash flows - operating, investing, and financing activities - and provides examples of cash inflows and outflows for each.
3) It presents the standard format for a cash flow statement with sections for the three categories of cash flows.
Consumer protection is a group of laws and organizations designed to ensure the rights of consumers as well as fair trade, competition and accurate information in the marketplace. The laws are designed to prevent businesses that engage in fraud or specified unfair practices from gaining an advantage over competitors
HelpWithAssignment.com is an online tutoring company. Our network spans 3 continents and several countries. We offer three kinds of services: Assignment Help, Thesis Help and Online Tuitions for students in their college or university
Performance Appraisal in Human Resources from HelpWithAssignment.comHelpWithAssignment.com
Performance appraisal systems take various forms and are central to performance management. Traditionally, appraisals occur annually between managers and employees, but trends are changing the style to be more dynamic with periodic reviews. The objectives should remain relevant and achievable to allow for relationship building and coaching. Performance appraisals aim to evaluate performance, identify training needs, motivate employees, and develop individuals through feedback. There are different orientations and types of appraisals such as self, peer, upward, and multi-dimensional appraisals involving feedback from various sources.
Discusses about biomedical microdevices, systems and its various applications such as miniaturized systems including microelectronics, MEMS, microfluidics and nanosystmes measured in microns and nanometers.
Brand equity refers to the intangible value associated with a brand name and the loyalty and perception it holds. It is influenced by factors like goodwill, quality, and price. Brands are valuable assets that can increase a company's financial value. There are three ways to measure brand equity: financially by price premiums, through brand extensions, and based on consumer attitudes and experiences. Building brand equity requires introducing the product with quality, making the brand memorable, and maintaining a consistent image over time through marketing mix elements like quality, price, and distribution.
This document discusses internal controls for computerized accounting information systems. It describes general controls that apply across systems, such as policies for access, backup procedures, and segregation of duties. It also discusses application controls that operate within specific systems or processes to ensure proper authorization, recording, completeness and accuracy of transactions. Examples provided include input and output edit checks, sequence checks, and comparison of control totals. Threats to internal controls like fraud or system errors are also mentioned.
This document discusses key concepts in finance including present value, future value, compound interest, risk and return, insurance, diversification, and asset valuation. It explains that present value allows comparison of sums over time by discounting future cash flows. Risk-averse individuals use insurance and diversification to manage risk. The value of an asset depends on expected future cash flows discounted at the appropriate interest rate. The efficient markets hypothesis suggests that asset prices already reflect all available public information, making it difficult to "beat the market".
This document discusses key concepts in finance including present value, future value, compound interest, risk and return, insurance, and diversification. It provides examples to illustrate concepts such as how present value can be used to compare cash flows over time. It also discusses why people are generally risk averse and how insurance and diversification allow people to manage risk. The document suggests that an asset's value depends on factors like expected future cash flows, and notes that the efficient markets hypothesis posits that asset prices reflect all available public information, making it difficult to outperform the market.
Never worry about accounting homework again, because our professionals are here! Our account service comes with a team of professionals who are more than ready to take on your assignment just log on to http://www.helpwithassignment.com/accounting-assignment-help
This document discusses various thin film processing techniques used in microsystems technologies. It covers topics such as microfabrication techniques including photolithography, etching, and bonding. It also discusses additive thin film deposition methods like oxidation, chemical vapor deposition, physical vapor deposition, sputtering and evaporation. Subtractive thin film processes like wet and dry etching of materials are also covered. Sacrificial layer processes, electrodeposition, electroforming and other inorganic material processes are summarized as well.
The document provides guidance for developing a successful research design and plan. It emphasizes establishing supervision arrangements and timelines, conducting a thorough literature review to establish critical knowledge in the field, and determining the appropriate research methodology whether qualitative, quantitative, or mixed. It stresses the importance of obtaining access to required data and keeping the research question and focus narrow.
Discusses about Microsystems Technologies,micromachining,polymer techniques,photolithography and mask design, wet and dry bulk etching, bonding, thin film deposition and removal, metallization, sacrificial processes, other inorganic processes, electroplating,polymer materials and basics, thick-film polymers, soft lithography and multiple methods of micromolding, stereolithography, LIGA
This document provides an overview of basic financial accounting concepts, including the accounting equation, balance sheets, assets, liabilities, owners' equity, revenues, expenses, transactions, historical cost, adjustments, interest, rent, depreciation, and unearned revenue. It explains that the accounting equation must always balance, assets represent resources owned, liabilities are obligations, and owners' equity is the residual claim on assets. Revenues increase owners' equity while expenses decrease it.
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The document discusses key concepts in financial accounting, including the accounting equation (Assets = Liabilities + Owners' Equity), balance sheets, and the basic elements they contain (assets, liabilities, owners' equity). It also covers revenues and expenses, how they impact owners' equity, and examples like sales of inventory that contain both revenue and expense elements. The document discusses various adjustments that may need to be made to accounting records like depreciation, interest, rent, and unearned revenue.
The document discusses key concepts in financial accounting, including the accounting equation of Assets = Liabilities + Owners' Equity. It explains that the balance sheet is an expanded expression of this equation. It also defines assets, liabilities, owners' equity, revenues and expenses, and how various transactions affect the accounting equation. Specific topics covered include historical cost, depreciation, interest, rent, sales of inventory, adjustments to accounts, and unearned revenue.
The document discusses basic concepts of financial accounting including the accounting equation, balance sheets, and key elements like assets, liabilities, owners' equity, revenues, and expenses. It explains that the accounting equation must always balance, with assets equal to liabilities plus owners' equity. Transactions can increase or decrease different elements of the balance sheet to maintain the balance of the equation. Historical costs, revenues, expenses, adjustments, and other accounting concepts are also summarized.
The document provides an overview of basic financial accounting concepts. It explains that accounting is based on the accounting equation of Assets = Liabilities + Owners' Equity. The balance sheet expresses this equation by listing assets, liabilities, and owners' equity. It also defines key elements like assets, liabilities, owners' equity, revenues and expenses. Transactions must follow the accounting equation and be recorded and analyzed to maintain accurate financial records.
Financial accounting mgt101 power point slides lecture 21Abdul Wadood Ansary
This document discusses distinguishing between capital and revenue expenditures and receipts in financial accounting. It defines capital expenditures as those that benefit future periods, such as acquiring or improving fixed assets. Revenue expenditures benefit the current period, like day-to-day business expenses. While capital items affect the balance sheet, revenue items are included in the profit and loss account. The document provides examples and exceptions to help classify different types of expenditures and receipts as capital or revenue.
The document provides an overview of basic financial accounting concepts. It explains that accounting is based on the accounting equation of assets equaling liabilities plus owners' equity. Assets are valuable resources owned, while liabilities are obligations, and owners' equity is the residual interest in assets. Revenues increase owners' equity by providing goods/services, while expenses decrease it by consuming resources to generate revenue. Financial statements like the balance sheet present a company's assets, liabilities, and owners' equity at a point in time.
The document provides an overview of basic financial accounting concepts. It explains that accounting is based on the accounting equation of assets equaling liabilities plus owners' equity. Assets are valuable resources owned, while liabilities are obligations, and owners' equity is the residual interest in assets. Revenues increase owners' equity by providing goods/services, while expenses decrease it by consuming resources to generate revenue. Financial statements like the balance sheet present a company's assets, liabilities, and owners' equity at a point in time.
The document discusses key concepts in financial accounting, including the accounting equation (Assets = Liabilities + Owners' Equity), transaction analysis, revenues, expenses, and adjustments. It explains that the accounting equation must always balance, and transactions may affect asset, liability, or owners' equity accounts. Revenues increase owners' equity while expenses decrease it. Interest is computed based on principal, interest rate, and time period.
Accounting and management unit one and basicsmbadepartment5
The document discusses key concepts in financial accounting including the accounting equation, assets, liabilities, owners' equity, revenues, expenses, and transactions. It explains that the accounting equation is Assets = Liabilities + Owners' Equity and must always balance. Transactions are analyzed to determine their impact on accounts to maintain the balance of the equation. Revenues increase owners' equity while expenses decrease owners' equity.
This document discusses various tax considerations related to managerial decisions such as expenses allowed as deductions, treatment of losses, replacement of assets, make or buy decisions, sale of assets used for scientific research, and owning or leasing assets. It provides details on tax provisions and calculations for comparing options. For example, when deciding between owning and leasing an asset, it recommends calculating the present value of post-tax cash outflows for both options and selecting the one with the lower present value. The document also includes an example problem comparing the options of purchasing an asset with borrowed funds versus leasing it.
Course Description
If you own or manage a business that uses independent contractors, you need to know when you can or cannot treat a worker as an independent contractor. This presentation answers some of the common questions about worker classification.
INTRODUCTION
Misclassification of employees as independent contractors is now a common phrase uttered by state and federal legislators and regulators. State task forces have been formed to crack down on businesses that do not pay unemployment insurance and workers’ compensation premiums or withhold taxes for workers whom the state believes are employees and not independent contractors.
purchase price allocation (PPA) is an application of goodwill accounting whereby one company (the acquirer), when purchasing a second company (the target), allocates the purchase price into various assets and liabilities acquired from the transaction.
Mercer Capital's An Introduction to Dividends and Dividend Policy for Private...Mercer Capital
Dividends and dividend policies are important for the owners of closely held and family businesses. Dividends can provide a source of liquidity and diversification for owners of private companies. Dividend policy can also have an impact on the way that management focuses on financial performance.
Executive Compensation Strategies Bearing Capital Partnersjamielist
This document discusses executive compensation strategies for negotiating tax-efficient rewards. It provides an overview and assumptions, then covers topics like negotiated vs contingent compensation, quick planning solutions, entitlements, equity plans like stock options and SARs, US employment considerations, negotiating benefits, exit strategies, dealing with severance, and more. The overall message is that executives have opportunities to structure compensation to maximize wealth in a tax-efficient manner through various negotiated arrangements.
Ammad awan glasgow - basic concepts of financial accountingAmmadAwanGlasgow
Ammad Awan Glasgow says account manager’s are successful if they are good at networking, and building and sustaining relationships. Their business and potential to make money depends on how well they manage in those areas.
The document discusses various aspects of business finance including:
- Sources of finance for businesses including internal sources like retained profits and external sources like bank loans. New businesses find it difficult to access finance due to high risk.
- Financial records that businesses keep like profit and loss statements, balance sheets, and cash flow forecasts to monitor performance and ensure solvency. Maintaining adequate working capital is important for businesses to pay debts.
- The concepts of revenue, costs, profits and losses. Break-even analysis can help businesses determine the minimum level of sales or output needed to cover total costs. Cash flow must be carefully managed to avoid insolvency.
5. FINAL ACCOUNTS WITH ADJUSTMENTS.pptxPoojaGautam89
The document discusses various accounting adjustments that may be required before finalizing financial statements at the end of an accounting period. Some key adjustments mentioned include closing stock, outstanding expenses, prepaid expenses, accrued income, unearned income, depreciation, bad debts, and provisions. The effects of each adjustment on the trading account, profit and loss account, and balance sheet are explained. Common adjustments like interest on capital, drawings, and loans are also covered. The purpose of adjustments is to determine the true profit/loss for the period and accurate financial position of the business.
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it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
LAND USE LAND COVER AND NDVI OF MIRZAPUR DISTRICT, UPRAHUL
This Dissertation explores the particular circumstances of Mirzapur, a region located in the
core of India. Mirzapur, with its varied terrains and abundant biodiversity, offers an optimal
environment for investigating the changes in vegetation cover dynamics. Our study utilizes
advanced technologies such as GIS (Geographic Information Systems) and Remote sensing to
analyze the transformations that have taken place over the course of a decade.
The complex relationship between human activities and the environment has been the focus
of extensive research and worry. As the global community grapples with swift urbanization,
population expansion, and economic progress, the effects on natural ecosystems are becoming
more evident. A crucial element of this impact is the alteration of vegetation cover, which plays a
significant role in maintaining the ecological equilibrium of our planet.Land serves as the foundation for all human activities and provides the necessary materials for
these activities. As the most crucial natural resource, its utilization by humans results in different
'Land uses,' which are determined by both human activities and the physical characteristics of the
land.
The utilization of land is impacted by human needs and environmental factors. In countries
like India, rapid population growth and the emphasis on extensive resource exploitation can lead
to significant land degradation, adversely affecting the region's land cover.
Therefore, human intervention has significantly influenced land use patterns over many
centuries, evolving its structure over time and space. In the present era, these changes have
accelerated due to factors such as agriculture and urbanization. Information regarding land use and
cover is essential for various planning and management tasks related to the Earth's surface,
providing crucial environmental data for scientific, resource management, policy purposes, and
diverse human activities.
Accurate understanding of land use and cover is imperative for the development planning
of any area. Consequently, a wide range of professionals, including earth system scientists, land
and water managers, and urban planners, are interested in obtaining data on land use and cover
changes, conversion trends, and other related patterns. The spatial dimensions of land use and
cover support policymakers and scientists in making well-informed decisions, as alterations in
these patterns indicate shifts in economic and social conditions. Monitoring such changes with the
help of Advanced technologies like Remote Sensing and Geographic Information Systems is
crucial for coordinated efforts across different administrative levels. Advanced technologies like
Remote Sensing and Geographic Information Systems
9
Changes in vegetation cover refer to variations in the distribution, composition, and overall
structure of plant communities across different temporal and spatial scales. These changes can
occur natural.
How to Make a Field Mandatory in Odoo 17Celine George
In Odoo, making a field required can be done through both Python code and XML views. When you set the required attribute to True in Python code, it makes the field required across all views where it's used. Conversely, when you set the required attribute in XML views, it makes the field required only in the context of that particular view.
Leveraging Generative AI to Drive Nonprofit InnovationTechSoup
In this webinar, participants learned how to utilize Generative AI to streamline operations and elevate member engagement. Amazon Web Service experts provided a customer specific use cases and dived into low/no-code tools that are quick and easy to deploy through Amazon Web Service (AWS.)
Chapter wise All Notes of First year Basic Civil Engineering.pptxDenish Jangid
Chapter wise All Notes of First year Basic Civil Engineering
Syllabus
Chapter-1
Introduction to objective, scope and outcome the subject
Chapter 2
Introduction: Scope and Specialization of Civil Engineering, Role of civil Engineer in Society, Impact of infrastructural development on economy of country.
Chapter 3
Surveying: Object Principles & Types of Surveying; Site Plans, Plans & Maps; Scales & Unit of different Measurements.
Linear Measurements: Instruments used. Linear Measurement by Tape, Ranging out Survey Lines and overcoming Obstructions; Measurements on sloping ground; Tape corrections, conventional symbols. Angular Measurements: Instruments used; Introduction to Compass Surveying, Bearings and Longitude & Latitude of a Line, Introduction to total station.
Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
Buildings: Selection of site for Buildings, Layout of Building Plan, Types of buildings, Plinth area, carpet area, floor space index, Introduction to building byelaws, concept of sun light & ventilation. Components of Buildings & their functions, Basic concept of R.C.C., Introduction to types of foundation
Chapter 5
Transportation: Introduction to Transportation Engineering; Traffic and Road Safety: Types and Characteristics of Various Modes of Transportation; Various Road Traffic Signs, Causes of Accidents and Road Safety Measures.
Chapter 6
Environmental Engineering: Environmental Pollution, Environmental Acts and Regulations, Functional Concepts of Ecology, Basics of Species, Biodiversity, Ecosystem, Hydrological Cycle; Chemical Cycles: Carbon, Nitrogen & Phosphorus; Energy Flow in Ecosystems.
Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
Text Books:
1. Palancharmy, Basic Civil Engineering, McGraw Hill publishers.
2. Satheesh Gopi, Basic Civil Engineering, Pearson Publishers.
3. Ketki Rangwala Dalal, Essentials of Civil Engineering, Charotar Publishing House.
4. BCP, Surveying volume 1
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2. GENERAL DEDUCTIONS
• Section 995-1 – definition of "deduction" means an
amount that you can deduct - circular definition -
unhelpful
• Therefore must rely on common law interpretations of
an allowable deduction.
• It is not always helpful to look at both sides of a
transaction:
– (a) recipient - builder - taxable - income from the
carrying on of a business of homebuilding
– (b) payer - home owner - not deductible - capital
expense incurred in respect of the acquisition of a
capital asset
3. General Deductions Section 8-1
• You may deduct from your assessable income
any loss or outgoing to the extent that:
– (a) it is incurred in gaining or producing your
assessable income (all taxpayers);
– or
– (b) it is necessarily incurred in carrying on a
business for the purpose of gaining or producing
your assessable income (business taxpayers only)
2 positive limbs apply where there is sufficient nexus
between the incurring of the expense and the
earning/production of assessable income
4. Section 8-1(2) - 4 Negative Limbs
• However you cannot deduct a loss or outgoing
under this section to the extent that:
– (a) it is a loss or outgoing of a capital nature; or
– (b) it is a loss or outgoing of a private or domestic
nature; or
– (c) it is incurred in relation to gaining or producing
your exempt income; or
– (d) a provision of this Act prevents you from deducting
it, e.g Fines or Penalties, s 26-5
5. Positive limbs
• There must be sufficient nexus between a loss
or outgoing and earning the assessable income
• Various tests applied by the courts
– (1) Incidental and relevant - the incurring of the
expense must be incidental and relevant to the
earning/production of income
– (2) Essential nature and character of the
expenditure - must be an income earning expense
6. Incidental and relevant
• Charles Moore v FCT
• The taxpayer claimed a deduction for the days trading
receipts stolen from an employee at gunpoint on the way
to the bank, he was not insured.
• Held – deductible, banking is a necessary and integral part
of business operations - The loss represented the kind of
misfortune, which was a natural or recognized incident
of the operations pursued by the taxpayer to earn its
income.
• Question - what if the taxpayer leaves takings in a
briefcase on a train, or in a car in the casino car park?
7. Incidental and relevant - cont
• Herald and Weekly Times Ltd v FCT
• A newspaper paid amounts to settle a defamation action
against it in respect of alleged libels published by it.
• Held – deductible, publishing a newspaper inevitably
exposes a publisher to the possibility of being sued for
libel. The expense of settling a defamation action was
incurred as a natural consequence of the inclusion of the
alleged defamatory material in the newspaper. The fact
that the income produced by the publication containing
defamatory matter arose in an earlier income year is
unimportant in the context of a continuing business
8. Inherent character of the expense
• Can the expense be seen as inherently an income earning
expense? Lunney v FCT
• Claim by an employee for a deduction for traveling
expenses in respect of traveling to work.
• Held - it not sufficient that an expense be incidental and
relevant to the derivation of income. Even if the expense is
a prerequisite to the earning of income, it must also have
the essential character of a business expense.
• The expense was characterized as a personal or living
expense - even if its purpose was to enable the taxpayer to
derive income, it was incurred because the taxpayer lived
in one place and worked in another.
9. Inherent character of the expense
Lodge v FCT
• The taxpayer worked at home, she needed a quiet
environment so she sent her children to a nursery school.
• Held - not deductible -essential character of the expense -
nursery fees - essentially personal or living expenses. Even
if the incurring of the nursery fees was a prerequisite for
the derivation of income and its purpose was to enable the
taxpayer to earn income, the expense did not have the
character of a business expense
10. Timing issue
• Loss or outgoing must be incurred in gaining or
producing the assessable income. It is not
necessary to match the loss or outgoing with the
income earned in the same income year - at least
where a continuing business is involved.
• Expense may be relevant to the income of:
– An earlier income year; or
– A later income year; or
– Be relevant to the reduction of future expenses
11. Timing- Amalgamated Zinc (de Bavay’s) v FCT
• A mining company discontinued its business but remained
liable to make annual worker's compensation payments.
After it discontinued its business it derived its income
solely from investments.
• Held - not deductible. Complete cessation of income
producing operations out of which the necessity to make
the outgoing arose - there was no longer a nexus between
the outgoing and the earning of assessable income. The
taxpayer continued to make worker's compensation
payments as a result of its liability under the relevant
legislation and not because they could produce income.
12. AGC (Advances) Ltd v FCT
• Concerned the deductibility of an interest expense
and bad debts. ATO argued that those expenses
not deductible on the basis of De Bavay’s case.
• If there is a break in the carrying on of the
business that produced the assessable income then
the nature of the business that has recommenced
must be substantially the same as that carried on in
earlier period of time.
• Losses can be claimed as a deduction without the
company actively carrying on the same business
13. AGC (Advances) Ltd v FCT
• It was suggested that Amalgamated Zinc might
have been wrongly decided. It was stated that the
liability to make the workers’ compensation
payments was a liability incurred in the gaining of
assessable income - on a construction of the
section which allowed as deductions expenditures
which related to the gaining of assessable income
“generally”, the obligation to make the payments
was a business liability which sprang out of the
carrying on of the business which had yielded
assessable income.
14. Placer Pacific Management Pty Ltd v FCT
• The taxpayer, a manufacturer of conveyor belts
installed a conveyor belt for NWCC. In July 1981
it sold its business. In August 1981 NWCC sued
the taxpayer claiming that the conveyor belt was
defective. In 1989 the taxpayer settled the action
by paying NWCC $325,000 and claimed the
amount as a deduction in the year of income
ending 1989.
15. Placer Pacific Management Pty Ltd v FCT
• Held - deductible - followed AGC.
• Provided that the cause of the business outgoing is
found in the business operations directed towards
the gaining or producing assessable income
generally –
• the fact that the outgoing was incurred in a year
later than the year in which the income was
incurred; and
• the fact that in the meantime the business may
have ceased will not deny deductibility.
16. FCT v Jones
• Wife continued to make loan payments on a
loan taken out for a business. The husband
dies and the business was sold.
• Full Bench of the Federal Court held still
deductible even though the business had
ceased to operate. The taxpayer had no
alternative but to keep paying the loan.
Working as a nurse.
17. Expenditure to produce future income
• In a continuing business, it is not the practice to
inquire into the exact time that it is hoped that
expense will affect the production of assessable
income. Expenditure upon raw materials, repairs
to plant, advertising - designed to produce results
in future year - deductible.
• Continuity requires that the expense should be
attributable to the year against which it is actually
defrayed.
18. Expenditure to reduce future expenses
- W. Nevill and Co v FCT
• Money was paid to persuade one of the joint managing
directors of the company to resign, as the joint managing
directorship had proved unsatisfactory.
Held - deductible - the purpose of the expense was to:
• Reduce salary costs, and to
• End joint control and so increase efficiency of the company and to
increase its income producing capacity.
Not a capital expense -
• No capital asset was acquired by the expense
• It did not affect the structure of the business (page 737)
19. Expenditure related to income of a previous year
• Continuing business - deductible in a later assessment
year:
• Example - exchange loss -
• An exchange loss is the difference between
• an amount paid in a later year and
• the estimated amount debited in an earlier profit and
loss account - deductible
• What if a business person declines to pay debts incurred in
a previous income year?
• Creditors may not be prepared to continue supplying stock
or may take steps to wind up the taxpayer's business
20. Losses and outgoings "to the extent"
incurred in gaining or producing assessable
income
• It may be necessary to apportion an expense
between the income earning and non-
income activities.
Steele v FCT
• Mrs. Steele purchased land on which to build a
motel. Money was borrowed to pay for the land
and the interest expense was claimed as a
deduction.
21. Steele v FCT
• The motel was not built on the land and the land
was used to agist horses.
• Held - the expense was deductible because the
loan was taken out to acquire a capital asset that
was to be used for income producing purposes.
The fact that the expected income was not
generated did not preclude deductibility. Not
necessary to match the expense with the
assessable income.
22. Loss or outgoing must be "incurred"
• An expense may be incurred even if not yet paid.
Incurred - does not mean paid, defrayed, discharged. An
expense is incurred when the taxpayer is committed, or
completely subjected to the expense. The expense must
be more than impending, threatened or expected.
• For example - a taxpayer uses electricity to run a factory.
The taxpayer incurs an expense not when the electricity is
used, but prior to payment when the electricity authority
renders a bill. It is only at that moment that the taxpayer is
completely subjected to the expense. Until then the
electrical authority cannot sue for the debt.
23. FCT v James Flood P/L
• Under an industrial award an employee only became
entitled to receive holiday pay after 12 months
continuous service, until then - the employee was not
entitled to anything and even then could lose the
entitlement to holiday pay - through unauthorized strikes,
unauthorized absenteeism, death.
• At the end of the income year a number of employees had
completed less than 12 months continuous service but it
was obvious that many employees would be become
entitled during the next income year. The taxpayer
calculated the proportional amount to which each
employee was entitled as at the end of the income year and
claimed a deduction.
24. FCT v James Flood P/L
• Held - not deductible - the liability was not yet
incurred. The employee might fail to become
entitled to annual leave for a number of reasons.
The taxpayer simply faced a possibility that it
might have to incur a loss or outgoing in the future
- the taxpayer was not yet completely subjected
to the expense.
25. Nilsen Development Laboratories P/L v
FCT
• The taxpayer's employees were entitled to long
service leave and holiday leave - some employees
had completed the required service period. They
were entitled to payment for long service leave
pay and holiday pay - "when" they took leave -
none had actually taken leave or been paid - the
taxpayer claimed a deduction in respect of
provisions in its accounts representing estimates
of leave entitlements incurred at the end of the
income year.
26. Nilsen Development Laboratories P/L v
FCT
• Held - not deductible. Liability arises once the triggering
event has occurred, at the point in time when the
employee has:
• (1) served the required period and
• (2) upon the occurrence of an event, that is - going on
leave, termination of employment, death, etc.
• Until then - no presently existing liability had been
created. The commercial propriety of making provision for
an accruing liability has little bearing on whether there is a
loss or outgoing under section 8-1(1) (formerly s51(1))
27. Section 26-10, ITAA 97
• Section 26-10 confirms that a deduction for leave
(LSL, annual leave, sick leave) may only be
claimed in the year paid
28. Provisions
• Provisions such as in respect of bad debts, etc, are not
allowable deductions. Provisions are usually merely book
entries in respect of anticipated or possible future loss
contingencies. At the point of time of making the
provision, it is not yet possible to say that a loss or
outgoing has been "incurred," as the relevant "triggering"
event has not yet occurred. However, insurance companies
incur liabilities at the time that certain events occur (for
example, motor accidents) but which in fact the
insurance company may not become aware of until
some time later.
29. Provisions - continued
• It has been necessary for such companies to make
some estimate of such liability usually by
reference to historical experience.
30. RACV Insurances P/L v FCT
• The taxpayer set aside amounts to cover
unreported 3rd. party claims - These were
estimates of the amount of claims arising out of
accidents occurring before the end of the income
year but not yet reported.
• Held – deductible. Unlike Flood's case - there
was no real question of the absolute liability of the
insured as the 3rd. party might lose their
entitlement. In this case the only question was
the estimation of damages.
31. RACV Insurances P/L v FCT
- Continued
• The fact that the amount is estimated and that it
may have to be adjusted in light of later events
does not bar the deduction. Once the event had
occurred (the accident) out of which absolute
liability arose, section 8-1(1) applied, which was
not dependant on notice of the claim.
32. Commercial Union Assurance v FCT
• Same facts as RACV case except that its accident
policies contained a clause stating that if the
insured failed to give notice to the insurer of the
event within the specified time, the insurer would
be technically able to avoid the policy. But it was
the established policy and practice never to
refuse to pay merely because the time limit had
not been observed.
33. Commercial Union Assurance v FCT
• Held - deductible. The taxpayer was definitely committed
to the expense. As a matter of business expediency and
commercial certainty (though not as in RACV, legal
certainty), the taxpayer's obligation to pay was not
subject to any contingency and had therefore completely
subjected itself to the payments. Although the taxpayer's
eventual liability could not be quantified exactly, it was
sufficient if a reasonable estimate could be made.
Furthermore, increases in the initial estimate were
deductible since the increase in the estimate constitutes a
new loss or outgoing which is incurred for the first time in
the year when the revised estimate is made presumably in
the subsequent income year.
34. Provisions – Insurance
• In both James Flood and Nilsen Developments, the
actual provision for holiday pay and long service leave
would only be an estimate made at current rates whereas
the amount to be paid is always at the rate of pay the
employee is receiving at the time the employee takes leave
which may occur many years later.
• The RACV and Commercial Union cases were both
concerned with accident insurance companies that had
long had a practice of providing annual reserves in respect
of current risks. It appears that while their principles are
not limited to insurance contexts, the commissioner may
not accept that these principles apply in other contexts.
35. Second Limb-s. 8-1(1)(b) - Business
deductions
• The deduction of a loss or outgoing necessarily
incurred in carrying on a business for the purpose
of gaining or producing assessable income. The
two limbs overlap to a considerable extent but the
2nd. Limb is confined to circumstances where a
business is carried on. It has been said that the
2nd. Limb in actual working adds little in
operation to the 1st. limb, which would appear to
apply to both business and non-business
circumstances.
36. FCT v Snowden and Willson P/L
• The taxpayer, a speculative builder, incurred expenses
attempting to counter by means of advertisements in the
press attacks made upon the conduct of its business in
Parliament and in legal costs appearing before a Royal
Commission to inquire into the charges.
• Held - deductible under 2nd. Limb and perhaps 1st. limb -
The expense was necessarily incurred because the nature
of the business demanded that it be incurred. The
expression "necessarily" in section 8-1(1)(b) does not
mean that an expense is compulsory or unavoidable.
37. FCT v Snowden and Willson P/L
• The word “necessarily” does not require legal or
logical necessity. It is sufficient if the expense is
appropriate, adapted for or dictated by business
ends or commercial necessity - that is, the
expense is based on reasonable commercial
judgment.
• A speculative builder inevitably confronts the
possibility of attacks upon its trading character.
• Therefore, it was commercially necessary to
expend such amounts.
38. Negative Limbs - Section 8-1(2)(a)
• Losses or outgoings of a "capital nature"
• Even if a loss or outgoing satisfies either limb of section
8-1(1), it is not deductible to the extent to which the
expense is of a capital nature. Note that this assumes that
a loss or outgoing incurred in gaining/producing the
assessable income (1st. limb), or necessarily incurred in
carrying on a business for that purpose (2nd. limb) may
still be of a capital nature.
• One judge has cynically stated in relation to numerous
borderline situations, that in many cases it is almost true
to say that a spin of a coin would decide the matter almost
as satisfactorily as an attempt to find reasons.
39. Tests for distinguishing between revenue
and capital - (1) Once and for all test
• Vallambrosa Rubber Co Ltd v FCT
• The taxpayer cultivated and sold rubber, claimed
deductions for annual weeding and superintending
immature trees.
• Held - deductible. Capital - "tends" to be spent once and
for all. Revenue - tends to recur every year, refers to
continuous demand. Not a conclusive test - a once and for
all payment may be of a revenue nature - For example - a
gratuity paid by employer to employee upon retirement or
payment to get rid of a director to facilitate the general
running of the business.
40. (2) The enduring benefit test
• If an expense creates an advantage of enduring benefit it
is generally capital but test this is not decisive. It means
that an asset or right acquired must have enough
durability to justify its being treated as a capital asset.
• Commissioner of Taxes v Nchanga Consolidated
Copper Ltd.
• 3 companies independently carried on copper mining but
had overlapping directorates/ common sales departments.
The world copper price fell by 10%.
41. Commissioner of Taxes v Nchanga
Consolidated Copper Ltd.
• The 3 companies agreed that:
• (1) B company would cease production for 1 year;
• (2) A and C companies would produce the amount of
copper that the 3 companies had formerly produced less
10%; and
• (3) A and C companies would pay B company
compensation.
• C company claimed that compensation paid was
deductible.
42. Commissioner of Taxes v Nchanga
Consolidated Copper Ltd.
• Held – deductible. The expense was not incurred
for the acquisition of a business or for the benefit
of a long term or enduring contract. The sole right
acquired was to have B Company out of
production for 1 year. It was not an accretion to
capital or the profit-earning structure, but an
incidental cost to the production and sale of
copper - an operating cost.
43. (3) Business entity test
Sun Newspapers Ltd & Assoc. Newspapers Ltd v
FCT
Taxpayer published the Sun Newspaper in
Sydney. It became aware that a rival company
intended to introduce a new paper and to sell it
more cheaply than The Sun. It agreed to pay the
rival company a large sum money by installments
in return for the rival company undertaking not to
produce a newspaper in Sydney for 3 years.
• Held - capital expense.
44. Sun Newspapers Ltd & Assoc. Newspapers
Ltd v FCT
• On both the “once and for all” test and the
“enduring benefit test” the expense bore the
hallmarks of a capital expense:
• the expense was of a non-recurring nature,
• The expense was incurred for the purpose of
securing freedom from threatened competition
and the resultant continuing benefit to
taxpayer's business.
45. Sun Newspapers Ltd & Assoc. Newspapers
Ltd v FCT
• Business entity test -
• The difference between expenditure and outgoings
on the revenue account and on capital account
corresponds with the difference between the....
– "business entity, structure or organization set up for the
earning of profit", and the....
– “the process by which such an organization operates to
obtain regular returns by means of regular outlays”, per
Dixon J (p 359, CLR)
46. Business entity test – Sun Newspapers case
• Profit yielding structure - On the one hand, in a
trade or pursuit where little or no plant is required,
the business structure may be represented by
nothing more than the intangible element of
goodwill.
• On the other hand, the business structure may
consist of the great aggregate of buildings,
machinery, plant and intangible elements -
restraint of trade agreements, etc.
47. Business entity test – Sun Newspapers case
• Under the Business entity test the court
held - the expense was of capital nature.
The purchase of the restraint of trade was an
addition to the newspaper's business or
profit-yielding structure rather than a
regular outlay for the purpose of yielding a
regular return.
48. Business entity test – Sun Newspapers case
• Dixon J established 3 tests to be considered:
– 1. The character of the advantage sought, and in this its
lasting qualities may play a part
– 2. The manner in which it is to be used, relied upon or
enjoyed….recurrence may play its part
– 3. The means adopted to attain it; that is, by providing a
periodical reward or outlay to cover its use or
enjoyment for periods commensurate with the payment
or by making a final provision or payment so as to
secure future use or enjoyment (page 766)
49. Hallstrom Pty Ltd v FCT
• The taxpayer wished to manufacture improved
refrigerators based on a patent owned by
Electrolux, which was about to expire. Electrolux
applied for a 10-year extension of their patent.
Hallstroms incurred legal costs in successfully
opposing the Electrolux application which meant
that the Electrolux process became generally
available for exploitation. The taxpayer sought a
deduction
50. Hallstrom Pty Ltd v FCT
• Majority held - deductible. The expense was not made to
acquire an asset (enduring benefit test) or to add to the
profit-yielding structure, but to enable them to carry on the
same business unfettered by a particular difficulty -
Electrolux’s patent. When Electrolux's patent expired,
Hallstroms had the same right as every other person to
manufacture refrigerators based upon the patent - a right
enjoyed in common with all persons is not a capital asset
of any single person - it did not acquire an asset.
51. Hallstrom Pty Ltd v FCT
• Minority held - although no enduring asset - capital - not
deductible. Applying the business entity test, saw the
purpose of the expense as being to enable Hallstroms to
complete and carry into effect its plans to re-organize
its manufacturing and selling business for the production
and sale of an entirely different refrigerator. The
expense was directed to ensuring that there should be no
renewal of the restriction which would prevent the re-
organization occurring - this went to the character and
organization of the profit-earning business as the
expenditure had a special and lasting importance to the
taxpayer’s profit-earning business and was not an incident
in the operations by which it carried on.
52. John Fairfax and Son Pty Ltd v FCT
• F and C companies had been rivals in an attempt
to gain control of A company. F company
expended legal costs in defending the issue of
shares to it which enabled it to gain control of A
company.
• Held - capital expense. Expenses incurred to
acquire a new asset - the shares and control of A
company - were concerned with the structure of
the profit-earning enterprise of F company.
53. Negative Limbs - Section 8-1(2)(b)
Losses or outgoings of a ‘private or
domestic nature’
• Not deductible though to some extent it is
arguable that they satisfy the primary requirement
of section 8-1(1) in that they are incurred as a
prerequisite to the earning of assessable income -
but the expense -
• (1) has insufficient nexus to the earning of
assessable income, and
• (2) is inherently of a private or domestic nature.
54. Private or domestic - Traveling to work
expenses
• Generally seen as a private expense, a living expense - a
cost of not living at or near work. Although traveling to
work is a prerequisite to earning assessable income, the
expense of doing so is not necessarily incurred in the
course of gaining or producing assessable income.
• FCT v Payne – travel between two places of employment.
Qantas pilot and farmer. No deduction. However,
Government introduced s 25-100 which allows the
deduction for travelling expenses between two places of
employment provided no break.
55. Home office expenses - Swinford v
FCT
• Self employed script writer working from home.
Separate room to do the writing in except for a
wardrobe in the room. She claimed deduction in
respect of rent in the proportion to which the room
represented part of the house.
• Held, deductible, no alternative place to work,
distinguished Handley and Forsyth cases.
• ATO – TR 93/30 and Practice statement PS
2001/6
56. Private or domestic - Handley v FCT
• Held - not deductible - a private or domestic expense. The
home was not his business premises; it was not his work
base. The essential character of the expense was domestic;
the study remained an integral part of the whole house
despite its predominant professional use. The study was
not distinctive, and it was not physically exclusive. It was
capable of domestic use and was in fact used domestically.
The taxpayer found it convenient to work at home, but was
not compelled to do so. He used the home study mainly for
research and reading. He did not require a secretary and
rarely saw clients at home.
57. Overseas and education expenses
• Expenses incurred in keeping up to date or to better enable
oneself to discharge one's existing duties or to earn one's
present income may be deductible. Costs incurred in
gaining an initial or other qualification by a person not at
the time engaged in any occupation or employment, or not
occupied or employed in an area which makes that course
of study necessary or desirable, would seem to be non-
deductible because there would not be the relevant
connection (sufficient connection) with the income-earning
activity. No deduction is allowable for self-education
expenses where the course of study is designed to enable
the taxpayer to obtain employment or to obtain new
employment,
58. Overseas and education expenses
• For example - the costs of an MBA course was
not deductible for a mining engineer who had been
retrenched.
FCT v Highfield
• A dentist in general practice that performed some
periodontal work wished to specialize in that field
so he spent 1 year in UK doing a post-graduate
degree. He successfully claimed as deductions the
cost of airfares, university fees and meals and
accommodation.
59. FCT v Highfield
• The success of his claim resulted from the acceptance of
his evidence that he had undertaken the specialist degree
so that he could expand that aspect of his work in his
general practice - as distinct from actually becoming a
specialist periodontist. The acquisition of the additional
knowledge would enable him to charge higher fees in his
general practice. Furthermore, the taxpayer was treated as
still carrying on business as a general practitioner even
though he had leased his business to another dentist while
he was away.
60. Clothing and Employment
• FCT v Edwards – cost of clothing
deductible. Secretary to the wife of the
governor of QLD.
• Needed an extensive range of clothing for
the position. Conventional clothing and not
a special uniform.
• Division 34, ITAA 97 – deductibility of
uniforms with registered design
61. Madad v FCT
• Taxpayer company incurred a penalty for
breach of the Trade Practices Act.
• Wanted to claim a deduction, Held no.
• Fines and penalties not deductible on public
policy grounds.
• Section 26-5, ITAA 97 introduced to deny a
deduction for fines and penalties.
62. Section 8-1(2)(c) – exempt income or
NANE
• If income is not assessable, then cannot deduct
losses or outgoings incurred in earning that
income.
• Example: part-time military service – exempt
income. The cost of travel or uniform expenses
not deductible. Dividends from shares in a Pooled
Development Fund – not assessable. Cannot claim
interest expense incurred in buying the shares as a
deduction
• GST input tax credit – amount not deductible
63. Specific non-deductions - section 8-
1(2)(d)
• A loss or outgoing cannot be deducted if a provision of the
Act prevents its deduction.
• Section 26-10 - cannot claim a deduction for LSL, annual
leave, sick leave, etc, unless paid (rather than incurred).
• Section 26-5 provides that no deduction is allowable for
an amount payable by way of penalty under a law. Before
its introduction, it was clear that such outgoings were not
deductible on the basis, that they were grounded in public
policy considerations that a penalty is imposed as a
punishment.
64. Examples
• Section 26-45 - social or sporting club membership
expenses are non-deductible regardless of the business
use made of the club by the member.
• Division 32 - entertainment is non-deductible although
there are a number of exceptions:
– In-house dining facilities,
– The expenses of a taxpayer whose business is providing
entertainment,
– Eligible seminars,
– Entertainment for the purpose of advertising or promotion,
– Where entertainment is provided to an employee as a fringe
benefit.
65. Examples
• Section 26-30 - the cost of accompanying spouses
on business trips is not deductible. These non-
deductible benefits become deductible where
provided to an employee and qualify as fringe
benefits under the FBTAA. Such expenses will
remain non-deductible where provided by a
taxpayer on his or her own behalf.
66. Examples - continued
• As a consequence of division 32, a self-employed
person cannot claim a section 8-1(1) deduction
for the cost of his or her entertainment nor that of
a guest even if the entertainment expense was
genuinely for the purpose of earning income such
as dining and entertaining an overseas business
associate for the purpose of securing a valuable
contract unless the entertainment comes within
one of the in-house exceptions to division 32