Grant and Mary Richardson, aged 57 and 56 respectively, own a computer accessories retail business in partnership called 'Computer Solutions', which operates in Camberwell, Victoria. The business has operated from these premises for 10 years. The Richardsons decided to expand their business and recently opened a new store on the 1 March 2023, in Wantirna.

Each year, the Richardson's go overseas to an international 'Computer Trade Show' to become aware of the latest developments in computer accessories. During the 2022-23 financial year, the trade show was held in Tokyo, Japan, where the Richardson's were fortunate to sign a franchise agreement to distribute 'Onetel', a new range of computer software. The cost of the franchise included a 'sign on' payment of $35,000 plus a payment of 1 % of sales revenue on the software.

While Grant and Mary own the shop in Camberwell, they decided to lease the premises in Wantirna. One of the reasons for doing this was because of the offer of a lease incentive by way of a twelve-month rent-free period and a free fit-out, valued at $50,000.

In October 2022, the Richardson's became aware that a property developer had sought approval to redevelop the Wantirna site as it was suitable for their business expansion. Consequently, the Richardson's spent $15,000 in legal costs in successfully opposing the development.

At the end of the year, a stocktake reveals that some of the stock is obsolete. Consequently, a write down of stock (at cost of $20,000) has been made to $11,000. QUESTION:

identify all relevant tax issues, critically analyses and applies the taxation treatment to the issues (you will need to argue and support your view and consider differing views if applicable), and indicate your recommended action based on your better view i.e. your conclusion . You must ensure that your analysis used to determine your recommended action is fully supported with relevant authority e.g. case law or legislation.

Cash receipts $ Sales to Customers 1,800,000 Sales Bonus (note ix) 8,000 Cash expenditure $ Purchase of Stock (note ii) 700,500 Salaries (note vi) 350,000 Set up costs - Wantirna (note v) 18,700 Rental payments 160,000 Telephone 4,000 Electricity 5,600 Overseas travel expenses (note vii) 18,000 Franchise: Cost 35,000 Royalty (1.5% of $1,800,000) 27,000 Car expenses (Running costs) 25,100 Legal costs (note x) 11,290 Advertising 13,800 GST 163,636 Furniture (note iii) 33,300 Entertainment (note viii) 10,800 Gas 4300 Miscellaneous 2,950 Sales Bonus (note ix) 8,000 Note: All amounts include Australian GST where applicable. Notes: $ i) Outstanding creditors 30/06/23 16,700 Outstanding debtors 30/06/23 77,000 At the year ending 30/6/23, a provision for doubtful debts has been raised equal to 1.5% of sales. Also, during that year, $17,000 of outstanding debts were written off as bad. i) Opening stock: Cost +Purchases -closing stock at cost Closing stock values: 30/6/23 Cost Replacement Cost Market Selling Value At the end of the year, a stocktake reveals that some of the stock is obsolete. 480,000 /700,500 390,000 390,000 425,000 480,000 Consequently, a write down of stock (at cost of $20,000) has been made to $11,000. iii) Office Furniture Opening adjusted value 25,000 Acquisition of furniture during 2022/23: Cost Acquis date Desk and Chairs 3,300 01/07/22 Computers/keyboards/printers 19,000 15/08/22 Partitions 11,000 9/07/22 iv) Care values related to the following vehicles Cost Acquis date Toyota Corolla 28,700 12/10/19 Toyota Delivery van 42,000 11/8/19 Ford Falcon* 58,000 02/11/19 BMW# 85,000 104/12/19 * The two cars are used by Grant and Mary Richardson, and it is estimated that they are used 65% for business. During the year on 15/3/23, the engine in the delivery van broke down. As a result, a new engine was put in the van at a cost of $14,500. The engine was a more powerful one modified to run on gas. V) Set-up Costs - New Premises in Wantirna: Stock removal and relocation 6,700 Staff Training 5,000 Special cabinets and office set up 7,000 Vi) Salaries: General Staff 180,000 Wages - Grant 85,000 - Mary 85,000 vii) Overseas Travel Airfares 8,600 Accommodation 6,000 Fare Registration 1,000 Meals and incidentals 2,700 viii) Entertainment Christmas Parties-staff 4,800 Clients 6,000 ix) Sales Bonus The sales bonus of $8,000 was received from the Computer Retailers Association for 'Computer Solutions' achieving the highest sales for their products in the June Quarter.