Question 2

Helga Becker has owned and run Beckers Patisserie in Belgrave since 2012.

• In January 2021 she spent $3,000 fixing a crack on one of the glass panels in the shops faade.
• In March 2021 she spent $5,000 replacing the shops timber floor with scratch-resistant super-strong ceramic tiles.
• In June 2021 she spent $2,500 repainting the external walls as they were peeling and faded.

Wishing to acquire a bigger oven. she decided to trade in the shops old oven, which had an adjustable value of $3,000, on 15 April 2020. The oven was sold on that day for $2,000.

Assuming Beckers Patisserie does not qualify for the small business entities concessions of subDiv 328-D ITAA97, how much can the business claim as one-off deductions for the year ending 30 June 2020?

a) $10,500

b) $3,000

c) $2,500

d) $5,500

e) $6,500

Question 3

Jim Scott owns two apartments, one in Richmond and the other in Carlton. He lives in the Richmond apartment, and the Carlton apartment is an investment property.

Jims son, Bill, is a full-time student at Melbourne University. As Bill does not derive any income and needed to be close to the university, Jim let him live in the Carlton apartment without paying any rent.

In December 2020 the Carlton apartments air-conditioning system broke down and Jim spent $3000 repairing it. In April 2021, taking advantage on the fact that Bill was away on a holiday, Jim renovated the Carlton apartments kitchen at a cost of $15,000.

Considering the facts above, select the correct alternative.

a) Jim can claim $1,000 as repairs under s 25-10 ITAA97, and can claim a capital works deduction in relation to the kitchen renovations under Div 43 ITAA97, both in the current income year.

b) Jim can claim $1,000 as repairs under s 25-10 ITAA97 in the current year, but he cannot claim a capital works deduction in relation to the kitchen.

c) Jim can claim depreciation on the air conditioning and the carport under Div 40 ITAA97.

d) Jim can claim an outright repairs deduction of $19,000 under s 25-10 ITAA97 in the current year.

e) Jim cannot claim any deductions in relation to the air-conditioning system or the kitchen in the 2021 income year.

Question 4

Geoff is a psychologist who works as a sole practitioner, operating through a rented room in a medical clinic. During the 2021 income year he paid $5,000 in office rental fees in one instalment, as well as $1,500 on a new sofa for his office purchased in July 2020. Wishing to improve his management skills, in January 2021 he enrols in an MBA course at the local university at a cost of $18,000 per semester.

Assuming Geoff does not qualify for the small business entities concessions of Div 328-D ITAA97, how much is he entitled to claim as one-off, outright deductions in the current year?

a) $5,000

b) $24,500

c) $23,000

d) $6,500

e) $1,500

Question 5

Edward incurred borrowing expenses of $99 in relation to a three-year loan taken on 1 October 2020 to finance an extension to his family home.

How much can Edward claim as a deduction in relation to the borrowing expenses for the year ending 30 June 2021?

a) $33

b) $25

c) $99

d) Nil

Question 6

Singh Pty Ltd is a small graphics business which is a small business entity. In the August 2020, it acquired a printing press at a cost of $15,000 and a photocopier at a cost of $3,000.

The maximum deduction that can be claimed by Singh Pty Ltd in relation to the assets above in the 2020/21 year is:

a) $18,000

b) $15,600

c) $9,700

d) $3,250

e) $2,250

Question 7

Transatlantic Pty Ltd is a large corporate entity with annual turnover of $80 million.

What is the maximum deduction to be claimed by Transatlantic Pty Ltd at the end of the current income year in relation to the following items?

• A delivery truck costing $20,000 acquired on 1 July 2020 (effective life self-assessed as five years).
• Legal costs of $5,000, incurred by June 2020 in relation to a lawsuit that involved defending the title to an income-producing block of land.

a) $5,000

b) $21,000

c) $25,000

d) $14,000

e) $9,000

Question 8

In which of the following circumstances will a deduction not be allowed for entertainment expenditure?

a) Jacks Antennas Pty Ltd provides discounted movie tickets to its employees as part of its employee incentive program.

b) Gomez Partners gives John Rose (who is the director of its major client, Rose Pty Ltd) access to its corporate box at Etihad Stadium during a soccer match at no cost. John was not accompanied by any Gomez Partners staff during the match.

c) Pac Cosmetics offers free makeup samples at a public promotional function at its Westfield store.

d) Fosters Brewing Group Ltd pays its director Jim Bartel an entertainment allowance of $15,000.

Question 9

Assuming that all expenses below were incurred in the 2021 income year, select the correct alternative:

a) Ingrid can claim under s 25-10 ITAA97 the amount of $15,000 spent on the renovation of her home bathrooms.

b) Bob can claim under s 25-10 ITAA97 an amount of $54,000 spent on replacing the entire wooden fencing around his sheep grazing farm with electric fences to keep predators away.

c) Grant can claim under s 25-10 ITAA97 an amount of $3,000 spent on repairing the malfunctioning cooling system in his pub.

d) Edgar can claim under s 25-10 ITAA97 a total of $18,000 spent building a new car port at his investment property.

e) Julia can claim under s 25-10 ITAA97 an amount of $20,000 spent replacing all the roof tiles at her business premises with a colourbond ultra-strong steel roof.

Question 10

Oliver Brown owns and runs Pen-Pal, a boutique stationery shop in Mulgrave. During the 2021 year he incurs the following expenditures in relation to his business:

1. Cleaning: $4,500

2. Salary and wages: $250,000

3. Electricity: $6,000

4. Rent of business premises: $40,000

5. Purchase of new heaters for store: $7,500.

6. Trading stock (paper, pencils, pens, staplers, etc.): $850,000

7. Repairs to display window accidentally damaged by a customer: $2,000

8. Installation of new air-conditioning system: $22,500

Assuming Pen-Pal is not a small business entity, select the correct alternative:

a) All expenses are entirely deductible in the 2021 year.

b) Only the expenses of items 3 and 4 are entirely deductible in the 2021 year.

c) All expenses, except for items 5 and 8, are entirely deductible in the 2021 year.

d) None of the expenses is entirely deductible in the current year.