Jimbo purchased a movie theatre in Sydney on 1 December 1964. The theatre is currently earning assessable income.

At the beginning of 2021 he realised the old wooden walls are starting to fall apart so he decided on 1 February 2021 to replace all four walls with brick walls at a cost of $500,000. If he had just fixed up the holes in the wooden walls with the same material it would have cost only $100,000.

Advise Jimbo of the relevant sections in the ITAA that are relevant in deciding what income tax deductions he can claim for the year ended 30 June 2021.

The answer must include an analysis of the pertinent sections of the relevant legislation, rulings and the relevant case law and give reasons