In May 2020, Pam purchased a property. Before buying the property, she engaged an experience valuer and a builder to inspect the property and prepare a estimate of necessary repairs. Their report stated that expenditure of $9,000 would completely restore the property. The items requiring attention were:

• Plumbing for $2,400
• Roofing and guttering for $2,100
• Painting for $3,600
• Incidental items for $900

The work was authorised and completed before the first tenants moved in.

Soon after, a section of the upstairs floor collapsed, and Pam was advised that the property was infested with white ants and that it would be necessary to spend another $25,000 in having the entire flooring replaced with improved timber.

Required:

A) Is Pam entitled to a deduction for the $34,000 or any part? (5 marks)

B) Will a deduction be allowed for an additional cost of $1,600 paid to pest control experts who have treated the remaining parts of the building? (2.5 marks)