Larry is a bank officer and is married to Lisa, a law lecturer at a university. Lisa specialises in environmental law. In July 2019, Larry resigned from his job and started a new delicatessen business. He borrowed $700,000 from a bank at an interest rate of 10% per annum. The loan was repayable over 10 years. He used $600,000 of the borrowings to purchase the goodwill and equipment of his new business. Larry loaned the remaining $100,000 to his wife at an interest rate of 2% per annum. Lisa used 50% of the loan to renovate her holiday home and the remaining 50% to undertake a comprehensive study of environmental laws affecting coal seam gas. As things turned out, Larrys delicatessen business was unsuccessful. After much deliberation he decided to sell the business in January 2021 at a substantial loss. The sale proceeds were not sufficient to discharge the loan. As a result, he continues to pay interest on his borrowing.

Required: Advise Larry what deductions he may be entitled to claim. Where appropriate support your answer with legislative authority and case authority.