Tom and Kate are about to open their optometry store, Sight Pty Ltd, on 1 August 2021. The company will sign a three-year lease to rent commercial premises at 16 Lansdowne Avenue, Toowong . They seek your advice as to the income tax consequences of the following transaction:

- one item specifically relating to the fit-out of the business premises: Ducted air-conditioning with a 10 year useful life costing $16,500 including GST.

Please ensure that you include calculations in your answers.

(a) for the above transaction, exactly how much will be tax-deductible (if any) in the company's 2022 income tax return. Please ignore any fringe benefits tax (FBT) consequences.

All calculations must be rounded to the nearest dollar using the correct number of days from the date of the transaction to 30 June 2022.

Please use 365 days for all calculations.

When presenting your answer, please make sure to briefly refer to appropriate references (ie. sections of the ITAA (1936) and/or ITAA (1997) and relevant taxation rulings (including Taxation Ruling TR 2021/3).

Furthermore, for depreciable assets under Division 40, the company elects to use the diminishing value method and that any asset has a residual value of $Nil.

For any assets subject to the capital works allowance under Division 43, please use the straight line/prime cost method for both accounting and income tax purposes.