You are employed as a manager of a chartered accounting firm in Brisbane, Top Star Accountants. One of your largest clients, Jason Harris, is a high profile commercial real estate salesman.You are aware that Jason has made a significant amount of real estate sales during the 2016 financial year and have estimated his taxable income will be in excess of $250,000.Whilst completing Jason's 2016 individual income tax return you notice a handwritten note of his stating that he spent a total of $15,000 on a "business" trip to Hawaii in January 2016.The $15,000 comprised return airfares, accommodation, meals and taxi fares.After discussing the amounts involved with Jason, you have identified the following:
? The trip to Hawaii was for a total of 10 days;
? Jason was accompanied by his new girlfriend, Olivia;
? They stayed at a 5-star luxury hotel, being the Sheraton Waikiki;
? It is obvious that the primary purpose of the trip was a romantic holiday; and
? Jason advises you that he popped in to visit two local Hawaiian real estate agents to ask questions about the local Hawaiian real estate market and to discuss property prices. Each visit lasted no more than 10 minutes.Jason has requested you claim the full amount of $15,000 as a tax deduction as he wants to minimise his income tax payable.
Required:You are required to write a formal, internal report/memo to the partner in charge, Ruth Rose,outlining how you intend to approach this request with your client.Please quote appropriate references to Australian ethical pronouncements and appropriate sections of the Income Tax Assessment Acts (1936) and (1997), relevant cases, relevant paragraphs within Taxation Rulings and ATO Interpretative Decisions in your memo.You are NOT required to calculate the amount of the tax deduction nor calculate Jason's 2016 taxable income.