Question

Taxpayer incurs the following expenses in relation to their tax affairs in 2020 income year.

• $100 for tax preparation fee for 2018/19 return paid to a retired tax officer who helped complete their tax return on mygov.com.au
• $5000 Payment of tax payable, pursuant to Commissioner's notice of assessment issued for 2018/19
• $250 interest expenses for borrowing money to pay the tax bill
• $300 General Interest Charge component of tax bill

In regard to the above expenses, what deductions are available to the taxpayer?

Select one:

a. $100

b. $300

c. $350

d. $5,350

e. $250

Answer 1

B.$300 is the correct answer.

Explanation- Tax preparation fee is an allowable expense only when the cost is supported by an evidence to claim the dedication, and here it's maintained by a retired tax officer, So claiming is not possible.

Tax payable is the liability.It is complied of taxes due to the government within one year. And thus it's not an expense to be claimed.

ONLY interest expenses incurred for an income producing purpose (i.e, INVESTMENT) are deductible.

Can claim a dedication for interest if it is imposed in the year for General Interest Charge (GIC).GIC is on existing unpaid tax liabilities and incurred on a daily basis, in the year it is imposed.

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