Question 1:

Show the tests developed by court cases to differentiate between losses and outgoings on revenue account and on capital account.

Show the deductibility, with reference to legislation or case law, of the subsequent losses or outgoings of Michael, a solicitor:

• Professional association fees of $1,200.
• Law textbooks to the value of $950 purchased as part of his professional library.
• He has paid $5,000 in course fees for a post-graduate degree in accounting, which he hopes can lead to a career in taxation law once completed.
• He purchases a laptop costing $1,650 to use for work purposes, though he will use it for private purposes 10% of the time as well.

You should describe why you have come to your decision in each case above.

Question 2:

Justin, aged 58, is about to sell his lawn mowing business that he has owned for 14 years, and has come to you for advice to minimize his tax in relation to the sale. He evaluates he will make a gain on sale of $90,000. He is considering moving overseas permanently and selling this business as well as a rare artwork and a canoe he acquired in September 2012.

Advise Justin of the capital gains tax implications if he sells these assets now.