Francis is an experienced businessman working in the hospitality industry for many years. He has recently purchased an old restaurant. The commercial kitchen in the restaurant was in poor condition. Replacing the whole commercial kitchen will cost Francis $23,000. The cost of repairing the kitchen appliances will be $4,900, however some parts may not be available in the market anymore as these appliances are too old and obsolete. Francis decided to replace the commercial kitchen with brand new modern appliances because new modern appliances in the market have better features and durability. Advise Francis on the deductibility of the above transactions. Your advice must be supported by reference to relevant legislation and principles of tax law.

Requirement

identification of material facts regarding Franciss deductibility of the commercial kitchen expenditures in the given scenario, and the critical discussion of tax consequences relevant to the assignment question. 2 Marks

Identification and analysis of legal issues / legal question and relevant taxation law in regards to Franciss deductibility of the commercial kitchen expenditures (e.g. ITAA 1936 and ITAA 1997). 5 Marks

Thorough yet succinct application of tax law (e.g. ITAA 1936 and ITAA 1997) to material facts in Franciss deductibility of the commercial kitchen scenario. 3 Marks

Correct information and taxation law regarding the deductibility rules have been used and properly cited. A detailed analysis has been performed. 2.5 Marks

Detailed and accurate conclusions regarding Franciss deductibility of the commercial kitchen expenditures are reached from the discussions. 2.5 Marks