Workplace Health and Safety

Workplace Health and Safety Safety Engineering TMA 1 At the start it is fair to surmise that health and safety was never at the forefront of any business or company. But over many years it can clearly be seen and noted that a company cannot flourish without it. This being said it was not until the early 1930’s that the first formal Health and safety text book was introduced by H.W. Heinrich which speaks volumes of how poor the health and safety situation was coming up to this time. Moving forward through the ages it can be seen that things where moving in the right direction from the emergence of more responsible and co-ordinated attitudes in the 50’s to the all powerful Health and Safety at Work Act in 1974 to our current day Acts that protect workers in every which way imaginable. Companies that work hard and invest in overall workplace health and safety should experience reductions in illnesses, injuries and fatalities. This will return financial savings in a number of the companies sectors, such as reducing employees compensation fees and medical costs, avoiding preset penalty fines, and reducing the amount of money used to train new/replacement staff and the cost of conducting accident investigations. Overall, employers commonly find that improvements to workplace health and safety can mean substantial improvements to their companies’ financial performance and productivity. By investing in health and safety a company can improve business and must see that complying with health and safety should not be looked at as a regulatory load that has been forced upon them as it offers significant opportunities. Benefits can include: Cut costs; Lower risks; Reduce employee sickness/absence and staff turnover; Less accidents; Smaller risk of lawful action; improved status with suppliers and partners; Greater reputation for business responsibility among investors, customers and communities; More productivity, because employees are happier, fitter, healthier and more motivated. HSE figures show the personal and economic cost of failing to meet health and safety standards each year: Masses of working days and hours are used up because of work-related illness and injury. Thousands deceased from occupational diseases/illness. Over a million employees have self-reported distress from a work induced illness. As much as one worker is fatally injured every working day. It is clear to see that without an adequate health and safety setup within a company no matter how big or small they may be that they cannot compete or even exist without Safety. From a purely financial business mind the risks are far too great to waver safety and from a humanist perspective the loss of life should never be something to be risked against. 2A. What caused the event By what route(s) or mechanism(s) did the deviation or hazardous event occur? What should be done to prevent its recurrence or, if it is not technically or economically possible to prevent repetition, how can its probability be reduced to an acceptable level? Can the knowledge gained be applied elsewhere? 2B. The quantitative approach to health and safety simply put can be defined as a set of equations used to determine levels of safety. Quantitative safety levels are data and numbers put forward in order to try and estimate achievable levels of safety and measure how well they perform in quantitative results. It should be made clear that if a quantitative safety performance level has been set, it must be able to be measured or estimated in quantitative terms. Quantitative data does give a very clear picture of a system and should be applied if possible. Setting up a reliable quantitative system for safety target levels helps and enables companies to measure and record all achieved levels of safety, and could help provide a sound basis for managers and directors to make decisions. The desired target safety outcome should be presented in either relative or absolute terms. Mathematical models are the common practice used to define quantitative safety target, for example to make an estimate of a target rate of safety occurrences of a stated severity. It is also very important to note that it is often impractical or even impossible to quantify all factors. 3A. What is a hazard? The meaning of a hazard is often very misleading and can be very confusing as many dictionaries do not give specific definition and at times combine the term â€Å"risk† causing great confusion between the two. Most describe a hazard as a danger or a risk which explains why many substitute one for the other. The way that I feel best describes a hazard is- any source of potential harm, damage or ill health effects on someone or something under normal working conditions. Realistically it is something that can cause harm or ill effects to either individuals (health effects) or organizations (property damage or equipment loss). For example any working system whether it is mechanical, electrical or chemical can reach its potential to destruct through use by any amount of means i.e.; fire, explosion, mechanical fault. It would not be good practise to measure a hazard confidently against size or severity. What is risk? Risk can be foreseen as the probability or the chance of ill effect that someone may experience an adverse health effect or even be caused harm by being exposed to a hazard. It can also very easily apply to a companies, property or equipment loss or damage. An example of risk could be: the risk of developing lung cancers from smoking could be shown as – â€Å"smokers are 10 times (for example) more likely to contract and die of cancer than non smokers†. An alternative way of reporting risk is by using a number or lettering system i.e. â€Å"a number X, of smokers per 100 smokers will have a chance of developing lung cancer† (dependent on age and the amount of years they had been smoking). This type of risk is expressed a likelihood or probability of a person developing a disease or incurring an injury. These differ to hazards because they refer to the likely or possible consequences (e.g., emphysema, lung cancer and heart disease from cigarette smoking.) 3B. Ordinary (industrial) Ordinary risks are a common in all industry related businesses and are caused predominantly by employee’s everyday work and activity whilst carrying out their jobs. Classic examples of these can range from; slipping and tripping hazards, objects falling on personal from heights, personal falling from heights, physical injuries caused from lifting, physical injuries causes from interference with industrial equipment. All of the above risks are only applicable to staff working in an industrial environment and not the general public Residual A danger or risk of an event or action irrespective of being in line with science and fact can be seen as a residual risk, residual risks can and will conceive dangers, even if all possible measures of safety are theoretically applied. An example could be of a water tank or pump failing and the residual risk being flooding. Process Process risk can be seen as the result of a risk differing from predicted estimates based on the pure random chance of an event. For example if a die is thrown 6 times. It could be estimated that it will land on the number 1 once every 6 throws if the nice is fair. Process risk can be explained that the number of one’s thrown could be more or less than once due to the randomness of chance in the dice throwing process Societal risks Societal risk, as its name suggest is the risk to the society or local group of people that may be subject or exposed to a major hazard. The risk is best surmised and worked out by area and location ranging from factors like blast radius, flood radius, predictable wind direction when measuring a gas release. An example where societal risk would need to be factored in would be when any company plans to build or produce something that could/would hold some kind potential societal hazard. This can be plotted and calculated using a FN curve to determine the full risk of the set up. 4. Classify the following situations in terms of type of risk and complete the risk table by assigning probabilities between 0 (not possible) and 1 (certain) with 0.1 – 0.3 (low), 0.4 – 0.6 (average), 0.7 – 0.9 (high) for injury and equipment damage for each hazard. State concisely the reasons for your choices and any qualifications you feel are required. Factors such as weather, location and population density should be considered and stated. (i) Object falling from scaffold. (ii) Tripping over a low level pipe in a petrochemical plant whilst on nightshift. (iii) Electric shock from overhead cable/line struck by lightning. (iv) Radioactive leak into a river from nuclear power station. (v) Electricity supply interruption in an equipment store with emergency lighting. (vi) Not replacing a walkway grating on an oil rig. (vii) Hydrogen sulphide release from pocket in the end of a blanked off pipe in a crude oil fractionation plant. (i). I have selected the object falling from a scaffold as an ordinary risk and scored the probability of risk as 0.5 as is the nature of the risk there will always be the risk of objects falling from a height when working at height, I have not scored it to high as safety measures are always in place when working at heights to prevent and limit this type of risk. I have scored the probability of damage higher as generally anything falling has the potential to cause damage and at 0.8 this highlights that fact. (ii) I have categorised the tripping situation as a ordinary risk as well as a process risk, ordinary because tripping situations are overly common and happen day to day in industry and a process risk because process risks can be seen as the result of a risk differing from predicted estimates based on the pure random chance of an event i.e. tripping over a low level pipe that you may or may not have passed over safely 100 times before. I have scored the probability as low because if it was a pipe that has always been there it should be clearly marked as a danger and known to employees working around it and scored the risk of damage as low to reflect the low risk of probability of falling over the pipe and causing injury or damage to equipment. (iii) I have selected residual risk, process risk and societal risk to cover this as all 3 risks or at least parts of them can be seen. Residual as all risks and dangers can be covered and measured but not account for a lightning strike, process risk as the chances of lighting striking are extremely low but the pure chance and randomness of the event prove the process risk element and societal risk as the local area may be affected be power cuts and disruptions to their everyday functions. I have scored the probability as low as the chances statistically of lightning striking are low but have scored the risk of damage as extremely high as damage to life and equipment could be irreversible. (iv) I have selected the radioactive leak as a societal risk as the potential ecological damage to the surrounding area would be detrimental, not only affecting local wildlife but also human life and in fact any other business or being that depended on the river. I have scored the probability as low as current nuclear Power stations operate under extremely strict safety laws and practises. This being said I have scored the probability of damage as 1 the highest possible as this sort of incident could not happen without massive amounts of damage. (v) I have scored this event very low on both damage and risk probability as the only risk present would be ordinary and since safety measures are in place i.e. emergency lighting I could not foresee a high risk or probability of danger. (vi) I have scored this risk as high as the risk is very high that damage or injury will occur. I have classed it as a ordinary industrial risk as it would be caused by employee’s everyday work and activity whilst carrying out their jobs or negligence thereof. (vii) A danger or risk of an event or action irrespective of being in line with science and fact can be seen as a residual risk, residual risks can and will conceive dangers, even if all possible measures of safety are theoretically applied. An example could be Hydrogen sulphide released from a pocket in the end of a blanked off pipe in a crude oil fractionation plant, and the societal risk would be placed on anyone in the direct area. 5. The incident in my opinion could very easily been avoided, to look at the reasons why I will discuss measures that I feel should have been in place and followed, and as a result of them not being followed the incident occurring. What where the operators training and skills? Was the operator fully trained to operate is this kind of hazardous environment? Could the operator have been trained but simply forget a crucial step by not replacing the man hole cover and put it down to human error. What was the HS culture like in the workplace? His own and the companies? Could this be to blame, was there a permit to work in operation? Safe system of work in operation? Had the operator read it and signed on. These are all vital steps that need to be taken into account when working in hazardous areas and are often over looked. These would have highlighted what he could do and how to complete the task, including replacing the manhole cover when not in use. Had the operator carried out this task before? If not should the operator been supervised by someone with experience of the job at hand? And should the operator been working alone at all? Should the vessel have been charged again with nitrogen before work began again to ensure/minimize low chance of ignition? As the manhole had been left open allowing air to fill the chamber. Could an intrinsically safe scraper rod have been used? One not causing a spark? Risk Assessment/COSHH assessments? Were any done? Had the user Followed â€Å"Safe working with flammable substances† regs and abided by the five principles of control; Ventilation Ignition sources Exchange of a flammable substance for a less flammable one Separation. Without knowing the answer to any of the questions above any of them could very easily caused the incident. In my personal opinion I would have put the incident down to not following safe working practise on the job, i.e. not replacing the manhole cover and not re-charging the vessel with nitrogen to minimise the chance of ignition.

Teaching Philosophy :: Education Teachers Reflective Writing Essays

Teaching Philosophy Teaching is a profession that can only be defined by those who are in it, and no two teachers will ever give the same answer. Over the past few weeks I feel that my philosophy on teaching has changed drastically. Students look up to their teachers, they look to learn and to have a companion. The students have a thirst for knowledge. I always thought that students would dread coming to math, but many look forward to it. For me, math has always been a strong point and a subject that I have enjoyed and I look forward to being able to share my love with my students. My goal is to be successful. Successful to me means to be able to change the life of at least one student. To be an inspiration to those that I teach. To share a love for a subject that most students hate. To touch at least one student’s life and know I made a difference. I want to be one of those teachers that students are excited that they have. I want to make math fun and have a good time doing it. My goal is to be the teachers that I admire. To be able to become the teachers that I have admired there are several ways to go about it. Cooperative learning strategies are a huge help in having the students learn mathematics. There are many different methods that will assist in the education of the students. Of all of the different strategies, the ones that I have found to be the most useful are random reporting and the roundtable. These methods have all students participating equally and not able to â€Å"slack off† when working in a group. All students must be ready to answer and pay attention fully in order to be successful in the lesson. There are certain ways of going about teaching math that will make it interesting for students. Finding a way to grasp a student’s attention and relate the subject matter to their lives would make the class more enjoyable. This leads into my belief of what a good teacher is.

The Role of Desdemona in Shakespeare’s Othello :: Othello Essays

The Role of Desdemona in Shakespeare’s Othello In Othello’s society only men made decisions. Thus, in Othello, the title character and other male characters drive the plot, leaving the women to deal with the consequences. Desdemona’s role in the play shows the way the male-dominated society treats women. Desdemona and Othello have just eloped at the beginning of the play. The first run-in with Desdemona is with her father, Brabantio. He asks her about her duties as a daughter, and she responds saying her duty as a wife now supercedes her former place. Society in the 1600s expected women to be subservient and obedient, as Brabantio’s outrage at Desdemona’s elopement shows. Women were required to remain loyal to men. Additionally, as a daughter, Desedmona was required to ask permission to be married, and because she did not she turned away from society’s expectations. However, by saying that she is now loyal to her husband more than to her father, Desdemona sticks with society’s expectations. But the shock of her marrying without permission was enough to anger and sadden Brabantio, the symbol for society in the beginning of the play. Once Iago has poisoned Othello’s mind with lies about an affair between Cassio and Desdemona, Othello becomes suspicious and distrusting of Desdemona. He is convinced that his wife is a whore, but never speaks to her about his suspicions. Othello refuses to confront Desdemona because, just as their society mandates, to him women are untrustworthy and decietful. Othello (and society) truly believes that if he asks her about Cassio, she will deny sleeping with him. Because Desdemona is a woman, she is not given a chance to speak on her own behalf. It is this same societal issue that played a part in her death. Othello the man and thus obviously stronger and more logical, suffocates Desdemona without hearing her side of the story first. The society in which they live gave Othello permission to kill Desdemona without her even really knowing why. The Role of Desdemona in Shakespeare’s Othello :: Othello Essays The Role of Desdemona in Shakespeare’s Othello In Othello’s society only men made decisions. Thus, in Othello, the title character and other male characters drive the plot, leaving the women to deal with the consequences. Desdemona’s role in the play shows the way the male-dominated society treats women. Desdemona and Othello have just eloped at the beginning of the play. The first run-in with Desdemona is with her father, Brabantio. He asks her about her duties as a daughter, and she responds saying her duty as a wife now supercedes her former place. Society in the 1600s expected women to be subservient and obedient, as Brabantio’s outrage at Desdemona’s elopement shows. Women were required to remain loyal to men. Additionally, as a daughter, Desedmona was required to ask permission to be married, and because she did not she turned away from society’s expectations. However, by saying that she is now loyal to her husband more than to her father, Desdemona sticks with society’s expectations. But the shock of her marrying without permission was enough to anger and sadden Brabantio, the symbol for society in the beginning of the play. Once Iago has poisoned Othello’s mind with lies about an affair between Cassio and Desdemona, Othello becomes suspicious and distrusting of Desdemona. He is convinced that his wife is a whore, but never speaks to her about his suspicions. Othello refuses to confront Desdemona because, just as their society mandates, to him women are untrustworthy and decietful. Othello (and society) truly believes that if he asks her about Cassio, she will deny sleeping with him. Because Desdemona is a woman, she is not given a chance to speak on her own behalf. It is this same societal issue that played a part in her death. Othello the man and thus obviously stronger and more logical, suffocates Desdemona without hearing her side of the story first. The society in which they live gave Othello permission to kill Desdemona without her even really knowing why.

Mitochondria And Chloroplast Essay :: essays research papers fc

I. Introduction Out of all the organelles there are two that have fascinated microbiologists for the past hundred years. The first is the mitochondria, nicknamed the "powerhouse of the cell." The second is the chloroplast in plant cells that have functions similar to those of the mitochondria. What do these organelles do? What are the similarities and differences of these organelles? This essay will help you to understand these two fascinating organelles. II. Mitochondria Mitochondria are small cytoplasmic organelles. They are five to 10 micrometers long and one to .5 micrometers wide. They main function is to provide energy for cell activities. They house the respiratory enzymes that convert oxygen and the products of fat, carbohydrate, and protein metabolism into adenosine triphosphate (ATP) and guanosine triphosphate (GTP), chemicals that have high-energy bonds. They are hollow all except for a folded line of matter that contains the ribonucleic acid (RNA) or deoxyribonucleic acid (DNA) of the cell. Mitochondrion make use of a process known as oxidation to make fat acids and pyruvate acid into (indirectly) ATP and Pi (inorganic phosphate). The process goes as follows: 1) Oxidation of pyruvate acid into acetyl coenzyme A. 2) Oxidation of fat acids into acetyl coenzyme A. 3) Oxidation of acetyl coenzymes from step one and two into CO2 and NADH2. 4) Oxidation of NADH2 by oxygen forming water. 5) Synthesis of ATP coupled to NADH2 oxidation by process of oxidative phosphorylation. Most of this is self explanatory except for the last step (5). The final step contains a phrase "coupled to." This means that the compound (NADH2) must be present and have been oxidized for the synthesis of ATP, similar to a catalyst's presence of some reactions. Although the mitochondrion's major purpose is to supply the cell with the much needed ATP, it has others. Included in this list are nitrogen metabolism, porphyrin synthesis and steroid hormone synthesis. III. Chloroplasts Chloroplasts are complicated green organelles that occur within the cytoplasm of plant cells. They are the main sites of photosynthesis. Photosynthesis is the change of light energy, CO2 water into sugar which is used as food. They are disk shaped organelles and are surrounded by two layers of membrane that enclose the watery inside or stroma. Inside the stroma there are green dots called grana (grains) that hold chlorophyll. As with the mitochondrion the Chloroplasts use radiant or solar energy to make a product. In this case hexose. 1) The pigment complexes in the chloroplasts (including but not limited to chlorophyll) collect solar energy. 2) The light energy gathered in the first step is used to run an electron transport chain that oxidizes water into 0xygen. NADP is reduced. 3) ATP synthesis is coupled to the electron transport train.

The Tomb of Shihuangdi

THE TOMB OF SHIHUANGDI Assignment 1: The Tomb of Shihuangdi Anesha Fair (Davis) Professor Christina Trego HUM-111 November 4, 2012 Archeologists have unraveled the mysterious plan of the tomb of Shihuangdi. The tomb is a 2,200 years old structures, and famous for being the home of 7,000 terracotta horses and warriors. In addition the covering is 2. 13 square kilometers. â€Å"The revelation of the structure is the greatest achievement in study of the Qin Shi Huang Mausoleum in the past 40 years. Furthermore archeologist has discovered construction over hundreds of square kilometers and a little more than 600 tombs of those burned alive with the emperor. Workers began digging into the ground outside the city of Xian, China, to their greatest awakening archeologist discovered a large sized clay tomb poised and filled with thousands clay soldiers in battle position. The clay soldiers were also found with their facial expressions in a unique manner, and positioned according to their ran k.The theory provided is the best one to explain. Such an event impacted many lives and the mystery of The Tomb of Shihuangdi kept many people wondering. Taking a closer look into history Ying Zheng was the first Emperor of Qin. He took the throne in 246 B. C. Ying Zheng was 13 years of age. During the time of his rain he invasion the Great wall. After a short time period had occurred Ying Zheng began laboring many workers for his special project. Such a number as 700,000 on this project that would bring their life to a end.Furthermore the mystery of the tomb is filled with â€Å"models of places, pavilions and officers as well as fire vessels precious stones and rarities. † A mystery questioning why and what was the reason Ying Zheng deceived so many soldiers and trapping them into their death hiding models of palaces and precious stones of such, what was he really covering up? Questions only he could answer.References http://science. nationalgeographic. com/science/archaeol ogy/emperor-qin/ http://www. china. org. cn/english/culture/40333. htm

I Know Why the Caged Bird Sings Theme Reflection Essay

In the story, I Know Why the Caged Bird Sings, there are many themes. Two of them include racism and displacement. At a very young age, Maya met the effects of racism and segregation in America. She had been told about the differences between blacks and whites, which developed her belief that only blonde hair is beautiful and that she is a fat black girl stuck in a nightmare. However, Stamps, Arkansas, was so segregated that as a child Maya never really saw white people which made her believe that they didn’t exist. As Maya gets older, she is approached by more personal incidents of racism, such as a white dentist’s refusal to treat her. These unfair events humiliate Maya and her relatives. She learns that living in a very racist society has shaped her family members, and she tries to overcome them. Resistance to racism has many forms in I Know Why the Caged Bird Sings. Big Bailey buys glitzy clothes and drives a fancy car to state his wealth and runs around with women to declare his masculinity in the face of degrading and reducing racism. Momma keeps her pride by seeing things realistically and keeping to herself. Daddy Clidell’s friends learn to use white peoples’ racism against them in worthwhile cons. Maya first experiments with resistance when she breaks her white employer’s heirloom china. Her bravest act of disobedience happens when she becomes the first black streetcar conductor in San Francisco. Blacks also used the church as a place of revolutionary resistance. This story also includes the theme of displacement. Maya is moved around to seven different homes between the ages of three and sixteen. As said in the poem she tries to recite on Easter, the statement â€Å"I didn’t come to stay† becomes her shield against the reality of her rootlessness. Maya is always humiliated, making her unable to put down her shield and feel comfortable staying in one place. When she is thirteen she moved to San Francisco with her mother, Bailey, and Daddy Clidell. She finally feels that she belongs somewhere for the first time. As Maya continues her journey, she realizes that thousands of other terrified black children made the same journey as she and Bailey. Traveling on their own to newly wealthy parents in northern cities, or back to southern towns when the North failed to supply the economy it had promised. African Americans descended from slaves who were displaced from their homes and homelands in Africa, and blacks continued to struggle to find their place in a country friendly to their heritage.

Taxation Law Essay

1. The assessability or otherwise to Jino and Anna of the annual bonuses paid by Darling Bank to them. Consideration of the proximity of services or employment relationship, the importance of the donor’s motive and the status of gratuitous payments are relevant in determining whether the bonuses received are assessable income. We can determine that the bonuses satisfactorily fulfil the requirement that for the bonuses to be assessable they must â€Å"come in†. (tenant v smith) Natural incidents of employment will be income, because they arise from a service relationship and because they are an expected incident of the occupations. Kelly v DCT) Ultimately, it is the character of the payment in the hands of the recipient that is determinative (Scott) of income. The bonuses received by Jino and Anna were not mere gifts. The amount in Scott v FCT was a gift; it was gratuitous, not made in discharge of an obligation and not taken by the recipient as discharging an obligation and not income by ordinary concepts. The payments in Scott v FCT and Moore v Griffiths were ‘one-off’. The payments were in addition to entitlements under service agreements; the donor’s motive was to make a personal tribute and the payment was unexpected.While income generally exhibits recurrence, regularity and periodicity, it would be wrong to conclude they were necessary elements and that a ‘one-off’ payment in the nature of a ‘gift’ cannot be income. (demonstrated by Squatting Investment Co) In Moore v Griffiths, the bonus received was a testimonial or personal gift rather than a reward for services rendered by the taxpayer in the course of his employment. The payment had no foreseeable element of recurrence, and there was no knowledge or expectation on the taxpayer’s part that the payment would be made as a reward for rendering his services.A bonus payment is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997, which provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. The initial presumption, prima facie, a payment from taxpayer to recipient is not income (Hayes v FCT) may be displaced if in substance and reality the payment was a product of services.Ordinary income is typically regarded as including salary and wages and fees connected with employment or provision of services; the critical element being the connection with an earning activity. Amounts derived from employment or the provision of services are income. In FCT v Dixon, the amount taxpayer received was assessable because the receipts were of an income character, and the amount was an expected periodical payment arising out of circumstances, and also because it formed part of the receipts upon which he depended for regular expenditure.Similarly, the bonuses Jino and Anna received fulfille d 3 critical elements in FCT v Dixon; the payment was periodical, incidental to employment and relied upon for regular expenditure. In FCT v Harris, payments were unrelated to the length or quality of service, and were periodic yet unpredictable. Hence, they were unassessable as the critical elements in Dixon’s case were absent in Harris. In FCT v Kelly, the prize money the footballer received was held to be payments as income. Kelly was aware that the prize would be offered,S15-2 sets out that allowances and other things provided in respect of employment or services can be included in your assessable income. S15-2(1) states that â€Å"assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums provided†¦ in respect of†¦ any employment of or services rendered†. Hence, if the bonuses are consequently not considered ordinary income, it will still be regarded assessable under s15-2 as the amount that is assessable as ordinary income under s6-5 is not included in assessable income under s15-2(3).The key issue to consider is the ‘connection with earning activity’. It was for ‘work throughout the year’. The $100,000 bonuses can therefore be included in assessable income under s. 15-2 as a reward for personal exertion, even though the bonuses were unexpected and not relied upon by Jino and Anna (Moore). The bonuses were recurring, incidental to employment, of an ordinary kind. (Scott) There is direct nexus with employment; FCT v Cooke & Sherden is irrelevant because the holidays received did not represent income.There was no entitlement to alternative compensation if the holidays were not taken, and it was also not convertible into money. 2. Whether Jino and Anna are entitled to deductions for interest paid on the amount they redraw from their loan on the Darling Point property to partly finance their investment in the King Street property. ITAA97 S8. 1 (1) p rovides that you can deduct from your assessable income any loss or outgoing to the extent that â€Å"it is incurred in gaining or producing your assessable income†.Hence, Jino and Anna will be entitled to deductions for interest paid on the amount they redraw from their loan â€Å"to the extent† they are using it to finance their investment in the King Street property. Interest is characterised by the use of the funds; the fact that the original loan was for the Darling Point property is irrelevant. Consideration must be given to the redraw facility, that any fund used from the redraw is used to produce assessable income or for the business, and the interest on the portion of the fund will be deductible to that extent.In FCT v Munro, the deduction for interests were not permitted under s. 8-1 ITAA97. It was held that the â€Å"deductibility of interest depends on the purpose for which the principal is borrowed, a deduction in interest is not permitted when the borrow ed money is used for a purpose whereby no income is produced, even if the money is borrowed on the security of rent producing property†. The commissioner disallowed the taxpayer’s claim for deductions, on the basis that the borrowed moneys had not been applied exclusively to produce assessable income.The borrowed money had been applied for the benefit of the sons and hence interest was not incurred in gaining assessable income. Conversely, the purpose for which the principal amount of $400,000 Jino and Anna borrowed was for an investment in property that would produce rent. The fact that the Darling Point property was used as security for the loan as it was withdrawn from the ‘repayment redraw’ facility for residential property is irrelevant. Hence, Jino and Anna should be entitled to deductions for the 6% interest paid on the $100,000 withdrawal from the redraw facility.Steele v FCT considers whether there is sufficient nexus of residence with income produ ction; interest incurred before assessable income is derived is deductible if there is. It was established that the meaning of ‘assessable income’ in the first limb of s51(1) is summarised in Fletcher & Ors v FCT (1991) 173 CLR. Assessable income is to be â€Å"construed as an abstract phrase which refers not only to assessable income derived in that or in some other tax year but also to assessable income which the relevant outgoing ‘would be expected to produce’†¦Ã¢â‚¬ .The 6% interest withdrawn from their loan is incurred before assessable income is derived hence is deductible. 3. Appropriate tax treatment of the lump sum payout to Thomas from both Jino and Anna’s perspective and from Thomas’s perspective From Jino and Anna’s Perspective TR 2005/6 1. This Ruling explains the circumstances where it is considered that: (a) a lease surrender receipt is assessable income under section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997); and (b) a lease surrender payment is deductible under section 8-1 of the ITAA 1997. . This Ruling also addresses the application of the provisions of the ITAA 1997 covering capital gains and capital losses (CGT). The first issue to consider is first considering the general deduction provision s8-1. Although the lump sum payout passes the 1st positive limb, based on Sun Newspaper Ltd v FCT, we can establish that the payout is not of revenue but of a capital nature. There are 3 matters to consider in determining whether the payout is on revenue or capital account. Footnote: pg 446 of casebook) Parallel to the features of transactions of the expenditure in Sun Newspaper, [1] (a) the payout was of a large sum intended to remove competition for Tony, (b) the payout was recurrent in the sense that the risk of a competitor arising must always be theoretically present, (c) the chief object of the †¦Ã¢â‚¬ ¦ Considering the general deduction provision s8-1, if the payout was reve nue, it would be deductible. However, the capital nature of the payout fails the negative non-capital requirement under s8-1.As Jino and Anna are not â€Å"carrying on a business of gaining or producing assessable income† (s8-1(b)) in leasing out the shop, it is still a capital gains tax and we must consider further provisions for specific deductions for capital expenditure. Jino and Anna were not obliged to lease the shop to receive rent because Thomas was already willing and happy to pay fixed rental of $3,500 per month for 5 years. Therefore, the $5000 is not deductible because it is not a loss, but rather a result of voluntary action. If it were a loss incurred, then the amount would be deductible.Second, for the lump sum payment to be deductible, the expense has to be related to producing assessable income. Herald and Weekly Times Ltd v FCT derives the notion ‘incurred’, as â€Å"the expenditure (legal fees) incurred by the taxpayer was wholly and exclusive ly expended in gaining or producing its assessable income and was therefore deductible under s23(1)(a). † Since the $5000 payment was to terminate Thomas’s lease and provide an opportunity for Jino and Anna to obtain $500 more in monthly rent, it can be seen as being incurred to gain assessable income from the new lessee Tony.Consequently, the expense of $5,000 is deducted by straight line method over five years. Thomas’s Perspective The amount paid to Thomas can either be capital in nature where â€Å"the lease formed part of the profit-yielding-structure of the lessee’s business† or it could be income which â€Å"arises in the course of business activity†. If the compensation payment lead to the cancellation of business leaving the profit-making structure permanently impaired, then it constitutes as a capital gain. Considering Heavy Minerals (1966) Californian Oil ProductsIn Van den Bergs Ltd v Clark (1935), the House of Lords held that â⠂¬Å"the sum received by the taxpayer†¦ on the termination of the arbitration and in consideration of the taxpayer’s consent to termination†¦ was a capital receipt and shouldn’t be taken into account in computing the taxpayer’s liability to tax. † 4. Appropriate tax treatment of the waiver of Tony’s first month’s rental from both Jino and Anna’s perspective and from Tony’s perspective Jino and Anna’s perspective No money involved – agreement Not meant to pay each other money. Tony didn’t pay out any rent and anna didn’t receive.No money exchanged therefore first month no assessable income as no exchange. For tony didn’t pay out any rent therefore no deduction Tony’s perspective Orica Reduction in expenditure can not be income according to ordinary concepts assessable under s25(1). There was no profit or gain made as a result of the taxpayer entering into arrangements which was à ¢â‚¬Ëœa singular transaction, not part of the regular means whereby the taxpayer obtained returns’. Lees & Leech Even if it was assumed the payment received by taxpayer constituted a profit or gain, the payment was not received by it in the ordinary course of carrying on its business.TR 93/6 1. This Ruling is concerned with those arrangements which are used to reduce the interest payable on a customer's loan account. These are commonly referred to as ‘interest offset arrangements' but are called ‘loan account offset arrangements' in this Ruling. These products are generally structured so that no interest is derived by the customer and therefore the customer is not liable to pay income tax in respect of the benefit arising from the account. This Ruling: †¢ outlines the manner in which acceptable loan account offset arrangements usually operate; and †¢ xplains the limits on acceptable arrangements. 5. The appropriate tax treatment of the early repayment pe nalty from both Jino and Anna’s perspective and from Tony’s perspective TR 93/7 A penalty interest payment is generally deductible under subsection 51(1) if: (a) the loan moneys were borrowed for the purpose of gaining or producing assessable income or for use in a business carried on for that purpose; and (b) the payment is made in order to rid the taxpayer of a recurring obligation to pay interest on the loan, where such interest would itself have been deductible if incurred.Where the repayment of loan moneys borrowed for the purpose of producing assessable income is secured by mortgage, penalty interest payable on an early repayment which effects a discharge of the mortgage will generally be deductible under section 67A. 5. Penalty interest is not expenditure incurred in borrowing money so as to be deductible under section 67. 6. Where penalty interest is paid upon repayment of a loan incidental to the disposal of an asset, the payment is not taken into account unde r Part IIIA of the ITAA in calculating the amount of any capital gain or capital loss arising on the disposal.Subsection 51(1) provides that: â€Å"all losses and outgoings to the extent to which they are incurred in gaining or producing the assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income, shall be allowable deductions except to the extent to which they are losses or outgoings of capital, or are of a capital, private or domestic nature, or are incurred in relation to the gaining or production of exempt income. 9. Generally speaking, provided loan moneys were borrowed for the purpose of gaining or producing assessable income or for use in a business carried on for that purpose, penalty interest payable on early repayment of the loan will, unless it is of a capital nature, qualify for deductibility under subsection 51(1). This will commonly involve borrowings used to acquire an income-producing asset or to p rovide working capital to operate a business. 10.In the case of such borrowings, the central issue is whether penalty interest payments are â€Å"losses or outgoings of capital, or of a capital†¦ nature†. If so, then they will not be deductible under subsection 51(1), but may be deductible under sections 67 or 67A. 11. We do not consider that so-called penalty interest is, in fact, in the nature of interest. This is so even if the loan agreement uses the term â€Å"penalty interest†. The description of an item used in any relevant agreement is not conclusive of its character (refer FC of T v. Sth. Aust.Battery Makers Pty. Ltd. (1978) 140 CLR 645 at 655; 78 ATC 4412 at 4417; 8 ATR 879 at 884 per Gibbs ACJ and Cliffs International Inc. v. FC of T (1979) 142 CLR 140 at 148; 79 ATC 4059 at 4064; 9 ATR 507 at 512 per Barwick CJ). To call a payment â€Å"interest† does not conclusively determine that it in fact answers that description. Nor does it prevent the pa yment from being an outgoing of a capital nature. 12. Interest is considered to be â€Å"compensation to the lender for being kept out of the use and enjoyment of the principal sum†: see FC of T v.The Myer Emporium Ltd. (1987) 163 CLR 199 at 218; 87 ATC 4363 at 4371; 18 ATR 693 at 702). Penalty interest is not paid for the use of the lender's money. It is paid in respect of a period when the borrower has repaid the loan and does not have the use of the money (refer R. W. Parsons, Income Taxation in Australia at para. 6. 330) 13. The critical factor in determining the essential character of an outgoing is the character of the advantage sought by the making of the expenditure ( Sun Newspapers Ltd. v. FC of T (1938) 61 CLR 337 at 363 per Dixon J).Whether an outgoing is capital or revenue in nature â€Å"depends on what the expenditure is calculated to effect from a practical and business point of view† ( Hallstroms Pty. Ltd. v. FC of T (1946) 72 CLR 634 at 648 per Dixon J ). 14. As a penalty interest payment is a cost directly attributable to obtaining early repayment of a loan, the question to be answered is effectively: â€Å"what, from a practical and business point of view, is the advantage sought from an early repayment of the loan? † This is a question of fact to be answered on a case by case basis. 5. Where the advantage sought is the release from the contractual obligation to incur a recurrent liability to pay interest on the loan, and such interest would itself have been deductible, then the penalty interest payment is on revenue account ( FC of T v. Marbray Nominees Pty. Ltd. 85 ATC 4750; (1987) 17 ATR 93, Metals Exploration Ltd. v. FC of T 86 ATC 4505; (1987) 17 ATR 786). Such a payment does display certain capital indicia in terms of the tests enunciated by Dixon J. in the Sun Newspapers case (supra); i. e. t is a once-and-for-all type lump sum which eliminates a threatened disadvantage and thus produces a benefit of a lasting char acter for the taxpayer. Nevertheless, where the initiating cause for early repayment of the loan is a saving in future interest outlays, the payment is essentially revenue in character. 16. On the other hand, where the penalty interest payment is paid effectively as a price to rid the taxpayer of a burdensome capital asset or is otherwise incidental to the realisation of an asset, then it will generally be on capital account. 17.Where repayment of a loan is secured by mortgage, penalty interest payable on early repayment may be deductible under section 67A. Section 67A provides a deduction for expenditure (excluding principal or interest payments) incurred in connection with the discharge of a mortgage securing repayment of moneys borrowed for the purpose of producing assessable income. Unlike subsection 51(1), deductibility is not affected by whether the expenditure is capital or revenue in nature. As previously discussed, so-called penalty interest is not, in fact, in the nature o f interest, and is therefore not excluded on his basis from deductibility under section 67A. 18. Borrowing expenses which are on capital account and for that reason not deductible under subsection 51(1) may qualify for deduction under section 67. However, penalty interest is not â€Å"expenditure incurred†¦ in borrowing money† for section 67 purposes. These words, in the context of section 67(1), refer to a â€Å"cost† of borrowing; i. e. expenditure incurred in relation to the actual establishment of the relevant loan. The liability to pay penalty interest is first incurred after the money is borrowed, and is therefore not incurred in borrowing the money.The payment is not made pursuant to a contractual obligation which was incurred at the time of borrowing as an incident of establishing the loan (refer Ure v. FC of T 81 ATC 4100; (1981) 11 ATR 484). 19. Where penalty interest is paid upon repayment of a loan incidental to the disposal of an asset, the payment is not taken into account for Part IIIA purposes in calculating the amount of any capital gain or capital loss arising on the disposal. The payment would not be included in the cost base of the asset under section 160ZH.In particular, it is not within the categories of â€Å"incidental costs† of acquisition or disposal in subsections 160ZH(5) or 160ZH(7), and, as it is not in the nature of â€Å"interest† (see paragraphs 11 and 12 above), is not a â€Å"non-capital cost† under subsection 160ZH(6A). 22. Anne obtains a loan from a financial institution to purchase a rental property. Within the term of the loan Anne decides to sell the property. This requires her to repay the loan in order to discharge a mortgage over the property which secures the loan. In paying out the loan early Anne incurs a penalty interest payment. 3. The repayment of the loan, and the associated incurrence of the penalty payment, is a necessary incident of the sale of the property. A payment so connected to the realisation of a capital asset will be on capital account. The payment is therefore not deductible under subsection 51(1). The payment will, however, qualify for deductibility under section 67A as expenditure incurred in discharging a mortgage. 6. The CGT effects for Jino and Anna of the sales of the Darling Point apartment and of the King Street Property ———————–