Problem
Ana Whero is a talented seamstress who has made dresses for friends and family for years. People often say to Ana that she should give up her work as a librarian and become a full time dressmaker.
In 2017, when Ana makes a dress for her daughter Molly's year 13 ball, several parents ask her to makes dresses for their daughters. She makes the dresses and earns $10,000 for a cost of $2,000.
In 2018, Ana actively advertises her services at Molly's old school and receives orders for enough ball gowns to allow her to go part-time at her library job. She invests in an industrial sewing machine, and engages an accountant to advise on the best way to structure a business. In this year, Ana earns $40,000 and incurs costs of $5,000.
In 2019, Ana is working full time on her dressmaking. She has set up a website to take orders, and has employed an assistant. She earns $80,000 and incurs costs of $30,000.
Arguing that she is in business in terms of section CB 1 of the Income Tax Act 2007, Ana seeks to deduct her expenses in each of the three income years.
Task
Advise Ana whether she is likely to be able to claim the deductions in each of the three income years. (You should refer to relevant case law.)