CONTEXT

The focus of this Assignment is the business activities of Luxwood Pty Ltd, you are required to analyse facts, research and apply relevant law and provide considered advice to the company. Luxwood is a resident private company established in 2011 to manufacture quality furniture that is sold to retailers under several brand names and directly to the public. The Assignment comprises four tasks which are largely independent of each other. In respect of each task, the requirement is that you:

*Identify the issue/issues raised

20% of the available marks for each Task are allocated for this requirement.

*Identify and discuss the relevant provisions of the legislation, case law, ATO rulings and determinations.

30% of the available marks for each Task are allocated for this requirement.

*Advise the company what amounts are assessable or deductible for each Task.

In your advice you should also 'resolve' the issues raised by each task, and where appropriate advise what options or alternatives are available. 50% of the available marks for each Task are allocated for this requirement

Note: Disregard GST and Small Business Entity related matters You will not receive marks for discussing these.

Question 1

During the year it came to the directors' attention that a rival firm was marketing a lounge suite that appeared identical to Luxwood's best-selling line. An action to recover damages was commenced. The matter is yet to be finalised but the company's legal advisors are confident. At June 30 only $1,500 had been paid in legal fees but estimated additional costs of $24,000 had accrued although no account had been received.

Question 2

In November 2019 a visitor to Luxwood showroom slipped on the steps and sustained injuries requiring medical attention. She claims one of the steps was loose and commenced legal proceedings against Luxwood alleging her injuries were caused by the poor condition of the building. Luxwood has so far incurred legal expenses of $4,000 and the action has not been settled at 30 June