3106AFE - Income Tax Law and General Deductions - Law Assignment Help

Assignment Task

SECTION 8-1 General Deductions

8-1(1) You can deduct from your assessable income any loss or outgoing to the extent that:

(a) it is incurred in gaining or producing your assessable income

The word ‘incurred’ means that a liability to pay has arisen:

• An actual payment does not have to be made in order for a loss or outgoing to be incurred: W Nevill & Co v FCT
• To be incurred the expenditure must be more than impending, threatened or expected: New Zealand Flax Investments Ltd v FCT
• There must be a present existing liability to meet the outgoing: Nilsen Development Laboratories Pty Ltd v FC of T
• The taxpayer must have been definitively committed in the year of income to that loss or outgoing: FC of T v James Flood Pty Ltd

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