Question 3 (4 points)

Required: Discuss what amounts are deductible as specific deductions for Opt Pty Ltd. Assume that the $100,000 and $3,000 amounts are capital (4 marks).

Opt Pty Ltd sells prescription glasses through a variety of retail stores. In the current tax year it spent the following amounts: $100,000 on an independent consultant for expert advice regarding how Opt should modify their marketing strategy and products on offer so that they could target a younger client base. $3,000 in bank fees due to paying off the mortgage for one of its store premises earlier than expected.

Opt Pty Ltd also had $60,000 in debts from customer sales made on credit that were written off. These had been previously included in income. On top of these, it had a provision for doubtful debts in its accounts for an additional $40,000.