Sarah Stevens was an accomplished chef.In January 2018 she borrowed $125,000 from a bank to finance her new caf.She opened her caf in Melbourne in March 2018.The caf started slowly but was making a profit and she had repaid $50,000 of the capital of the loan.

When businesses in Melbourne were prevented from opening due to Co-vid 19 restrictions, she started providing takeaway meals and coffee.The second lock-down in Melbourne proved too much for her business and she decided to close the business.

She was able to sell some of the furniture and fittings, especially the kitchen equipment.This allowed her to pay down some of the loan.At the time she ceased the business she owed $60,000 to the bank.

Sarah had obtained a job in an unrelated field. She calculated that it would take her five years to fully pay off the loan.She has asked you if she will be able to deduct the interest on the loan in the following five years.

Research this problem.In presenting your argument provide any relevant sections, cases and rulings which may support your position.You should also provide commentary on any possible opposing arguments.