Gavin Green operates a shop situated on a sharp bend in the road. During the income year a truck fails to take the bend and badly damages the front of the shop. Gavin is undecided whether to restore the front of the shop to its original condition at a cost of $25,000 or to rebuild it so that it has a much more attractive appearance. The cost of doing this would be $40,000.

Required: Advise Gavin Green of the tax implications of:

(a) Restoring the front of the shop to its original condition; and

(b) Rebuilding the shop front

Please refer to case law and legislation in your advice