Required: Advise ENG Ltd as to: (14 marks)

a) the deductibility of the $20,000 paid to the consultant; and

b) whether the $1,500, $1,000 and $500 are deductible as specific deductions.

Where appropriate, support your answer with legislative and case authority.

1. An engineering firm, ENG Ltd, has offices and workspaces for all its employees on its premises. Due to the COVID epidemic and lockdown laws, ENGs workers worked from home. Further, it is ENGs intention that once the lockdown is over, that its workers continue to be able to work from home for 2 days a week, and that this arrangement continue for at least the next 4 years. ENG pays a consultant $20,000 regarding the best way to implement the working from home arrangements, including getting advice on the best to way to monitor and motivate their employees. They are unsure if this amount is capital or not.
2. Due to ENGs workers working from home, ENG required a smaller office premises. As a result, it paid its lawyers $1,500 to write up a new lease agreement. Further, it borrowed $40,000 to pay for the moving costs. This was a 6 year loan, and in the current tax year the loan application fee was $1,000. There was interest payable of $500 of this loan in the relevant tax year.