Q4. De Cuisine Ltd operated a restaurant located in a Perth suburb, which served Japanese cuisine. The restaurant attracted many Japanese businessmen and was notably expensive. The name of the restaurant reflected the style of the cuisine and the name was a registered trade name of De Cuisine Ltd. The style of operation was suitable for franchise. The restaurant made a tax loss of $40,000 in Year 1. During Year 2, De Cuisine Ltd continued to operate the Japanese restaurant and also purchased a French restaurant, situated some distance away, from an unrelated party. De Cuisine Ltd never operated the French restaurant but converted the premises where the French restaurant was located into a second Japanese restaurant serving Japanese food. De Cuisine Ltd commenced to operate the second Japanese restaurant in Year 2. The second Japanese restaurant used the same registered trade name as the original Japanese restaurant, with similarities in service, menu, and decor. The second Japanese restaurant attracted a random cross selection of locals and it was notably cheap. For Year 2, De Cuisine Ltd reported taxable income of $30,000 and had a turnover of $45 million.

Required: (a) With reference to the FOUR factors of the similar business test, discuss whether De Cuisine Ltd can claim a tax deduction for its prior year tax loss. (4 marks)

(b) Calculate the adjusted taxable income and tax payable by De Cuisine Ltd during Year 2 under the similar business test.