James carries on a hardware retail business from his own business premises and had the following expenses during the current year ended 30 June:

• On 25 May of the current tax year he incurred $19 000 to replace the surrounding fence to his business premises. The original fence was made of wire. The new fence was made of a titanium compound metal and James considered that the new fence would be safer, easier to maintain and would have a substantially longer life than the original fence.

• On 25 June of the current tax year James put a new engine in his delivery truck (used 100% for business purposes) at a cost of $5500. The old engine had travelled 220 000 kilometres and was becoming very unreliable. The new engine had similar specifications to the original engine.

• On 30 June of the current tax year James incurred $1200 in replacing the tyres on his car. The car is used 60% of the time for business purposes.

Based on these transactions what amount can James claim as a tax deduction under s 25-10 ITAA 97 in the current income year ended 30 June?

Select one:

1.

$25 700.

2.

$6700.

3.

$20 200

4.

$6220.

5.

$25 220.