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Analysis Of The Case Law Of Buckley & Young Ltd V.

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1. Four apportionment methods
In general, there are four apportionment methods has been identified by the case law of Buckley & Young Ltd v CIR (1978) 3 NZTC 61,271 (CA) (Buckley & Young Ltd v CIR , 1978), and their name are listed in below:
 Factual use or availability for use for business and private purposes method (Buckley & Young Ltd v CIR , 1978)
 A pro rata basis method (Buckley & Young Ltd v CIR , 1978)
 Cash value equivalent method (Buckley & Young Ltd v CIR , 1978)
 Non-monetary factors method (Buckley & Young Ltd v CIR , 1978)
2. Two features of incurred expenditure for income tax purposes
The leading cases, CIR v Mitsubishi Motors Ltd [1995] and Commissioner of Taxation v James Flood Pty Ltd [1953] that reflect a taxpayer …show more content…

4. The meaning of “to the extent” ITA 2007, section DA 1
In my opinion, the phrase of “to the extent” in ITA 2007, section DA 1 means an item of expenditure may be apportioned between the amount that meets the general deductibility test or the amount which does not satisfy the test (CIR v Banks, 1978).
5a. Deferred maintenance
In this case, the client is operating a bakery, and he anticipates he will incur $6.000 in maintain his shop over the next 12 months. But according to the section DA 2 (1) ITA 2007, it states that deduction for any expenditure or loss to the extent that it is of a capital nature (DA 2 General limitations, 2004). Therefore, the maintenance expenditure is caught by section DA 2 (1), due to the maintenance expenditure has a capital nature. For that reason, the deferred maintenance of $6,000 is not allowed to deduct.
5b. Labour cost
In this scenario, the labor cost is to print his shop in order to save some costs, and it incurred by him in the course of carrying on his business, which is consistent with the section DA 1(b) ITA 2007 (DA 1(b) General Permission, 2004). Therefore, the labor cost $1,000 is allowed to deduct.
5c. Childcare cost
In this situation, his wife is ill and is in hospital for a week. So, he has to pay his neighbor $100, to look after their child. Put it simply, it is a childcare cost which has a private nature. According to the section DA 2 (2), it sets out a deduction for any expenditure or loss to the extent that it is

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