(Tax law aus)

PART A (10 Marks) On 1 July 2015, Panatech Ltd (non-SBE taxpayer) purchased a machine at a cost of $220,000 (GST inclusive) for use in its business. The Commissioners determination of the effective life of a machine is eight years, but Panatech self-assesses the effective life of a machine to be five years and claimed diminishing value depreciation on that basis. Panatech used the machine only for business purposes and sold it for $22,000 (GST inclusive) on 30 June 2019.

REQUIRED a) Advise Panatech on the taxation implications of these transactions. Relevant authorities must be cited in support of each answer. (5 Marks)

b) What (if any) are the capital gains tax consequences regarding the disposal of the machine? (2 Marks)

c) CALCULATE the amount of the deduction for the year ended 30 June 2019. (3 Marks)