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Advise Divanee as to her income tax consequences arising out of the information

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Question - Divanee is a Neurosurgeon at the local hospital. However, the long hours have been very draining, and she has decided to take a leave of absence from the hospital and pursue her interest in blending coffee beans to find the perfect taste. Advise Divanee as to her income tax consequences arising out of the information.

Answer -

Income Tax Consequences of the given transactions are -

a. Membership fees payment to the Australian Society of Neurosurgeons: This shall be allowed as deduction as Divanee is an employee of the hospital and has not given up on her job. She has only taken a break and may resume work anytime. Therefore, such payment shall be considered an allowed deduction in the given case.

b. Donation to a registered Deductible Gift Recipient shall be considered an allowable deduction. Any donations which qualifies the listed criterias as defined by the ATO and the recipients are classified as registered deductible gift recipient shall be classified as allowable deduction for the purpose of Income Tax.

c. In the given case, donation to the local neighbourhood community house provides personal benefit to Divanee. She would be permitted to book function room for free thrice a year where the normal booking fee is $250. Therefore, the given donation would not be allowed as a deduction. She can only claim a deduction up to the actual donation amount which is ($1,000 - (250*3)) or $250.

d. Payment towards newspapers which contained health related information shall be allowable as a deduction as this information is useful for her role as a doctor at the hospital. She is currently employed at the hospital and may resume work anytime. She has only taken a break from her employment currently. Therefore, any such expenditure which improves her knowledge and is beneficial for her current job shall be allowed as deduction against her employment income.

e. Travel cost to attend a Global conference is allowable deduction in an employment. However, if there is a non-work related component, such travel cost shall not be allowable as deduction. Here, Divanee has taken leave and is attending the seminar which clearly shows it is non-work related and shall not be allowed as deduction.


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