Briefly explain the extent, if any, to which each of the following payments made by an Australian resident taxpayer during the current year of income would be an allowable deduction. In your answers, refer when appropriate to statutes, Tax Rulings and/or case law. (a) Harry is a finance broker who arranges loans for his clients from various banks. He earns commission from the banks. Harry works from home and he also visits clients at their homes to arrange the paperwork. He visits banks to drop off the loan applications. His home office is where he does most of his work, stores client information and keeps all loan application forms from the various banks. Henrys home office occupies 10% of the total space in his home. His outgoings in relation to his home for the current tax year are as follows: -Council rates $3,600 -Interest on home loan $15,900 -Electricity and heating costs $1,600 -Cleaner $2,500 -Home telephone (60% of which is for business use) $1,100 -Mobile telephone bill (90% of which is for business use) $850 Calculate how much of the above outgoings/expenses are a deductible expense for Harry (10 marks) (b) During July in the 2017-18 year, Quick Profits Pty. Ltd bought an empty warehouse for conversion into rental units. To convert the building the company spent $780,000 in September 2017 to upgrade and change the building for new tenants. Advise Quick Profits whether the $780,000 expenditure is deductible for the company in the 2017-18 tax year? (5 marks) TERM 1 STANDARD EXAMINATION 2018 TAXATION LAW OF AUSTRALIA LAWS20060 Page 4 of 4 Question 3 10 Marks (a) Jack operates a small newsagency business with average monthly takings of $4,000. By January 2018 he sees that his business turnover is growing due to new clients and their employees buying various products from him. Jack believes that his average monthly takings will be over $7,500. Advise Jack if he needs to register for GST purposes and how a business can register if required to do so. (5 marks) (b) What is meant by the terms tax avoidance and tax evasion? Give examples in the response