(Australian Taxation)

In November 2020, Maurice Tamanaka decided to set up a business doing sign writing and design.

He called the business Foxy Signs. Maurice incurred the following costs in 2020-21 that he wants to claim as tax deductions:

$15,800 (incl GST) in commercial radio and newspapers advertising, letterheads and business cards. As at 30 June 2021, $5,800 of this amount was still unpaid;

$400 as an establishment fee in relation to a loan application. A loan of $100,000 was provided to him for a period of 5 years, commencing on 1 February 2021 at the rate of 7% per annum. Maurice used 60% of the loan for his new business, 40% to cover his home interest payments.

$20,000 on a new colour poster-printing machine from Germany. He also had to pay airfreight of $2,000 for the machine to be brought to Australia. The machine was delivered on 15 February 2021 and was installed by an electrician on 20 February 2021. The cost of installation was $500;

$33,000 as electricity costs for his home, in which the front bedroom has been converted and used from 9-5pm for business purposes, including meeting with clients.

$5,000 for a trip to Singapore. While in Singapore, Maurice attended a graphic design conference for 1 day. He also visited friends and did sightseeing. He was in Singapore for 10 days. The airfares cost $2,000, the conference fees were $1,000 and the hotel and food cost $2,000.

In May 2021, a letter arrived from a firm of solicitors alleging that their client (a sign-writer named Dave Fox) was the owner of the Foxy Signs brand name. Maurice engaged his own solicitor to defend this claim and ultimately it was agreed that Maurice could continue to use that name if he paid $30,000 as a lump sum to Dave Fox. His legal fees were $5,500 (incl GST).

In 2020-21, he sent 6 invoices for work completed. The total of the invoices was $30,000.

Required: Support all answers with relevant legislation and cases:

I. Advise Maurice on the deductibility (for income tax purposes) of each of the costs discussed above.

II. Calculate Maurices taxable income for 2020-21.

IiI. Advise Maurice whether he needs to register for the GST. In your answer, explain the tax consequences of registration. Use legislation to support your answer.