Tax Law Question:

REGAL made 275 requests to credit rating agencies during the 2021/22 income year for credit ratings of potential tenants, where REGAL had doubts about a prospective tenants credit history. The credit rating agencies, upon a request from REGAL, investigated the prospective tenants credit history and reported this to REGAL. REGAL was charged $40,000 for these services by credit rating agencies.

Advise REGAL and Arthur regarding the income tax implications arising from the above facts in relation to the 2021/22 income year. In your answer make sure you refer to any relevant cases, legislative provisions, tax rulings and principles of tax law.