Reference no: EM132555792

Question -

Part 1 - John bought two cars to use in his job as a salesperson. Both cars are purchased from a second-hand car yard. Car 1 costs $4,500 and Car 2 costs $10,000.

While driving Car 1 home from the second-hand car yard, having just purchased it, the car's motor broke down and John had to spend $1,800 having the motor repaired.

Car 2 performed well until John made a long sales trip to the outback six months after acquisition. John had to spend $1,500 repairing this car after it broke down because of the heat in the outback.

Required - Which expenses are deductible under s.25-10 as repairs?

Part 2 - Louise has owned a rental property for many years. The property has been well-maintained. However, some of the flyscreens have deteriorated and June has decided to replace the ground floor ones with security mesh fly screens, while the first floor screens will have the mesh repaired with normal mesh. The cost of security flyscreens is $1,300 and the normal mesh is $560.

Required - What is the deduction under section 8-1 Louise can claim against her rental income?

Part 3 - A taxpayer runs a business which in the current year has the following income and expenses:

Business receipts 28,000

General Business Expenses 25,000

Donation to a charity 8,000

Required - Calculate the taxpayer's taxable income/loss for the current year.

Part 4 - Lewis operates his own business selling pool equipment and materials as well as servicing swimming pools. Sales of equipment and materials are paid for at the time of sale. One of Lewis's customers bought some pool materials for $600 on credit on 21 June 2018 but could not pay the account which was issued on the same day because he went bankrupt in November 2018. Lewis wrote off the debt on 1 July 2019. Assume that there are no other relevant tax transactions.

Required - Advise Lewis as to what deductions (if any) he might be able to claim for the tax year ended 30 June 2019.

Part 5 - Lewis operates his own business selling pool equipment and materials as well as servicing swimming pools. Sales of equipment and materials are paid for at the time of sale. One of Lewis's customers bought pool equipment for $900 on credit on 1 April 2018 and the invoice was issued on the same day. The customer asked Aramis for more time to pay on 1 August 2018 and so Aramis immediately made a provision in the accounts for doubtful debts of $900. Assume that there are no other relevant tax transactions.

Required - Advise Lewis as to what deductions (if any) he might be able to claim for the tax year ended 30 June 2019.