Question 1 Fabulous Faces Pty Ltd is a resident private company carrying on business during the Covid-19 virus as an 'online' business. The company has two employees, Sandra and Jing, who are also the company's shareholders and directors. The business is conducted from their private residence. One of the three bedrooms in their home is set aside as an office and inventory is stored in another. Sandra uses her car only for business purposes, while Jing uses his car for both business and private purposes equally. Stock on hand at the beginning of the year was $11,000 and $7,000 at the end of the year. During the year ended 30 June, Fabulous Faces had the following expenses: $ 18,000 15,000 Advertising Administrative expenses (Note: included in administrative expenses are Council rates $2,500 Electricity $3,000 Telephone $1,500) Salaries Fringe benefits tax Lease payment for Sandra's car Lease payment for Jing's car Purchase of trading stock (Note: $11,000 stock was on hand at the start of the year and $7,000 at the end of the year 100,000 10,500 5,200 5,200 90,000 Required: (20 marks) Using the information in the table and the facts provided, advise Sandra and Jing which (if any) of the expenses are deductible and whether these expenses are deductible in full or in part. In your response give reasons and refer to sections of legislation and cases, where relevant. Fabulous Faces Pty Ltd is a resident private company carrying on business during the Covid-19 virus as an 'online' business. The company has two employees, Sandra and Jing, who are also the company's shareholders and directors. The business is conducted from their private residence. One of the three bedrooms in their home is set aside as an office and inventory is stored in another. Sandra uses her car only for business purposes, while Jing uses his car for both business and private purposes equally. Stock on hand at the beginning of the year was $11,000 and $7,000 at the end of the year. During the year ended 30 June, Fabulous Faces had the following expenses: $ 18,000 15,000 Advertising Administrative expenses (Note: included in administrative expenses are Council rates $2,500 Electricity $3,000 Telephone $1,500) Salaries Fringe benefits tax Lease payment for Sandra's car Lease payment for Jing's car Purchase of trading stock (Note: $11,000 stock was on hand at the start of the year and $7,000 at the end of 100,000 10,500 5,200 5,200 90,000 the year Required: (20 marks) Using the information in the table and the facts provided, advise Sandra and Jing which (if any) of the expenses are deductible and whether these expenses are deductible in full or in part. In your response give reasons and refer to sections of legislation and cases, where
