On 1 January 2021, Jackson commenced an art business which he calls ‘Ninja’. While the business is being established, he has kept his part-time employment as a traffic controller for the city council which earns him $50 000 per annum (Jackson has no reportable fringe benefits or reportable superannuation). To help get the business started, Jackson incurred the following costs.
1. Meals costing $350 for himself while travelling to purchase art items
2. $400 for a luncheon where he paid for the meals of local media and Art representatives so he could explain to them what he was planning to do.
3. Jackson intends to make his surfing lessons (supplementary business) available to people of all abilities. He paid $2,500 for food and drink provided at a seminar to better understand and develop capabilities in this area.
At 30 June 2021 Jackson’s accountant reported that Ninja’ had assessable income for the year of $5,000 and deductible expenses of $25,000.
Explain the tax consequences (implications) of the above transactions.