Question: Part A - Travel Expenses
On 4 May 2016, Michael flew to Melbourne for a two-day journalism conference. The conference is run by the Australian Journalists Association (AJA) and covered topics such as new research techniques, ethics for journalists and the use of new and emerging technology in reporting and journalism.
Michael believes that the conference will prove very useful for keeping him up-to-date on recent developments in the area that relate to his job. Michael personally paid all of the following costs relating to the conference:
$
economy class return airfares flying Qantas 670
2 nights accommodation - deluxe room (the Langham Hotel) ** 824
AJA conference registration fee 1,360
Phone calls home to Ashleigh and the kids from the hotel phone 16
Taxi fares to and from airports 144
Meals for two days while attending the conference 186
Minibar at hotel (soft drinks and nuts) 16
Purchase of a warm jacket (refer note below) 149
Purchase of a Codral cold and flu tablets and Vitamin C tablets 22
When Michael checked into The Langham Hotel in Melbourne, he was initially booked into a standard room for two night. The cost of the standard room for two nights was $650. However, when checking in at reception, he was offered the opportunity of paying an extra $87 per night (total of $174) to upgrade to a deluxe room with a river view room. Michael proceeded to do this and paid $824 for the two nights.
Michael also tells you that he did not pack anything warm. However, he is caught off-guard by Melbourne's fickle weather. Upon his arrival, the weather is a chilly 10 degrees Celsius. Michael promptly purchases a nice light brown jacket which he wears to the conference every day. Furthermore, as he feels he is getting a head cold, Michael pops into a pharmacy and buys a packet of Codral cold and flu tablets and Vitamin C tablets costing $22.
Michael advises you that he has kept receipts for all of the above expenses and has kept the appropriate travel diary for taxation purposes.
Required - Being the $174 upgrade from a standard room costing $650 to a Deluxe room costing $824 at The Langham Hotel in Melbourne. You are to advise Michael exactly how much is tax-deductible in relation to the accommodation.
Furthermore, please advise Michael as to whether he can claim a tax deduction for the cost of buying a packet of Codral cold and flu tablets and Vitamin C tablets costing $22 in Melbourne whilst at the conference due to the fact that he is getting a head cold.
Part B - Purchase of a Dell Desktop Computer
On 19 November 2015, Michael buys a Dell desktop computer at a cost of $2,800 from Myer. Michael uses this desktop computer exclusively to research breaking political stories and write his newspaper articles.
As a birthday present a few months ago, Michael was given a $200 Myer gift card from his family and friends. Michael bought the computer by redeeming the $200 gift card and putting the balance of $2,600 owing on his Visa card.
Required - Being the purchase of the Dell desktop computer from Myer on 19 November 2015. Michael bought the $2,800 computer by redeeming the $200 gift card and putting the balance of $2,600 owing on his Visa card. Please advise Michael how much is tax-deductible?
For each item above, students are required to outline:
- what section references, cases, rulings, determinations etc. were used as authority by the group to research the two abovementioned tax issues; and
- the conclusion (ie. claim the deduction or not claim the deduction for these two items).
Please do not quote the 2017 CCH Australian Master Tax Guide at all in your answer as this is not a source of taxation law. No marks will be awarded if the Master Tax Guide is referenced in your answer.