H & R Block Basic Course Chapter 7

HINTS

· For item D1 car expenses note the distance restrictions for the four claim methods.

· Item D1 is for the four car expense claim methods and nothing else. Parking goes at item D2, and if the taxpayer hired a car, or borrowed a friend’s car, for a taxable purpose and had petrol expenses, then those expenses would go at item D2.

· If the taxpayer is driving a company car, or a novated lease car, then there are no deductions whatsoever permitted, even if the taxpayer is paying for the fuel out of his own pocket. This is because the car is supplied as a tax-free fringe benefit.

· In the case of overseas travel, receipts for accommodation are always required.

· Note the travel diary requirements. The travel diary is like a motor vehicle log book – it works out what percentage of traveling expenses are deductible.

Question 2

a) You should ask about all the accounts that he had last year. Some may have been closed, or he might have forgotten some.

b) You should ask when the shares were bought, and whether any have been sold. It is also possible that she has lost dividend statements.

c) You MUST ask about income during the period July 1 to February 3. She might have been working cash in hand, or might have received Centrelink benefits, or might have mislaid a PAYG payment summary. She also could have been overseas, in which case you would need to look at residency and foreign income.

d) You should ask how many hours a week she worked, and for what period was she employed. Many PAYG payment summaries show the whole year when in fact the taxpayer was only employed for part of the year.

e) Since lump sum B refers to unused long service leave accrued before August 1978 he couldn’t possibly have a lump sum B. He will have to obtain a letter of correction from the ABC Ltd pay office, and a copy of the letter should be forwarded to the ATO.