Part A (15 marks)

On 1 July 2019, Brianna Smith resigned her position as a laboratory technician to undertake further studies to upgrade her qualification from an Associate Diploma in Science to a Masters Degree in Science at the University of Sydney. The duration of the studies was for one year full-time, and the cost of the Masters Degree was $12,000, which was paid by Brianna on enrolment on 7 July 2019. Briannas employer had indicated in discussions with her that she could return to her job on completion of the intended studies. During the last three months of the 2019/2020 tax year, Brianna participated in a student exchange programme with the University of Canterbury in New Zealand. The costs (which were all substantiated and are now expressed in Australian Dollars) were as follows:

• Airline ticket: $1,200;
• Accommodation expenses: $2,100;
• Meals: $1,900;
• Tuition fees: $1,500; and
• Study books and related materials: $1,500.

Of the three months (or twelve weeks) that Brianna was absent from Australia, ten weeks were engaged in full-time study, while the remainder of her time was spent on a skiing holiday in Queenstown on the South Island of New Zealand. The dominant purpose of Briannas travel was to study in New Zealand. Brianna hopes to graduate from her Masters Degree after her return to Australia and then gain employment, with a substantial increase in salary and position.

Required:

Advise Brianna Smith of what deductions may be claimed (if any) for the year ending 30 June 2020 in respect of the above expenditure. Show all calculations and refer to relevant legislation and case law to support your arguments for and against before arriving at your conclusion.

Part B (10 marks)

Kerry Smart commenced her retail clothing business in February 2020. On the 13 February 2020 she acquired a new computer and off- the-self software for her business. The computer is used solely for a taxable purpose. The business has an estimated average turnover of $400,000.

The tax invoice for the computer shows the following details:

Details	Cost $	GST $	Price $
Computer	5,600	560	6,160
Delivery Charge	40	4	44
Installation fee	100	10	110
Computer software	2,400	240	2,640
Maintenance of computer for 12 months	200	20	220

The effective life of a computer is estimated at 4 years.

Required:

Assume Kerry does not elect to enter the SBE regime and uses the prime cost method of depreciation rather than any instant asset write off, what capital allowance deduction can she claim for the 2019-20 tax year? Show all calculations and cite relevant legislation where appropriate to support your answer.

Total (15 + 10 = 25 marks) (625 words not including calculations)