An example of this is the rent for the 2 acres of land. Agist for the 2 acres of land at $600 each month. There is not much question of whether this income should be included or not in Catherine’ s total taxable income. The reason is that it is paid in cash, cash which is unlike cheque receipts with their conditions is less troublesome when it comes to taxation. Excluded Items for 20081. Interest on Catherine’ s three-year term deposit in France from the proceeds of the sale of her apartment.
As a foreign resident, Catherine’ s income derived outside Australia are not taxed in Australia (s6.5(3) and s6.10(5) ITAA97). 2. As for the cost to purchase the horse Betzy, it was excluded in the computation of Catherine’ s taxable income and income tax payable for 2008. The purchase of Betzy was not undertaken by Catherine to primarily carry on a horse related business. Rather the horse was purchased because Catherine is very passionate about horses. According to ATO Case Decision # CDS10293, an expense is allowed to be deducted from income if the expenses resulting from: o “ the activities are undertaken by the taxpayer have a significant commercial purpose; and “ the taxpayer has a purpose of profit as well as a prospect of profit from the activities. ” 3.
The cost of Catherine’ s requalifying exam as a doctor is excluded. For the computation of total assessable and taxable income, and income tax payable, the fee of $500 is not relevant. Moreover, this fee is not yet a work-related expense, since Catherine was not working as a doctor yet when she incurred the expense (Australian Taxation Office). It must be noted that the 1.5 percent Medicare levy for Australians was included in computing for Catherine’ s tax liabilities for June 30, 2009.
This is so because as so far as the exemption categories for Medicare levy, Catherine is not exempted. Specifically, Catherine is a resident of Australia, hence invalidating exemption category no. 3. The following are the exemption categories: “ You were a blind pensioner or you received the sickness allowance from Centrelink.
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