The unit Revenue Law
We had ONLY ONE meeting and we divide the assignment to 3 parts and each member in group take one part and we mad group in the Facebook to communicate with each other and one of the group member suggest the make google doc to see each other part and give an idea about the case study and work with each other and give comment.one of the group member which is Brenden he did his part in word document and put comment and send it in part that he is not sure asked what we think and after we give him our feedback he start the final draft overall they did really good job .me and the other group member we worked together in our part because its related to each other and we been working as group from long time I don’t know if you have to include this thank you.
Part B – Rick’s Expenses
Rick works 3.5 days (Monday to Thursday) a week for DxP and 1.5 days (Thursday and Friday) a week in his sculpture studio at home. Rick incurs the following expenditure during the 2019 income year:
• _He pays $20,000 for car parts to use in making his sculptures. He receives a $500 speeding fine on the way home after picking up the car parts from a motor mechanic.
• _He pays $50,000 in interest on his home mortgage. The studio takes up 10% of the floor space in the house.
• _He pays $800 to repair a broken window in the studio. The glazier put non-reflective glass in the window as Rick said he found the glare from the window gave him a headache.
• _He travels between his office at DxP and home 5 days a week, by bus, at an annual cost of $1,500.
• _On 1 June 2019, he buys an industrial quality welding machine to use in making the sculptures at a cost of $20,000. The Commissioner states that the machine should last 20 years.
• _Rick is thinking about starting a new business buying and selling old car parts. He asks his accountant to investigate the feasibility of the business before he decides. The accountant’s report cost $4,000. Rick decides not to start the business.
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• _Rick decides that he needs to improve his business and management skills. He enrols in an MBA at the University of Hawthorn. He enrols in 4 units (costing $2,500 each) in Semester 1 2019: three of the units are on business decision-making and one is on art history.
• _Rick wants to help his sister, Freda, buy a home. She can’t get a loan from the bank. Rick borrows $500,000 from Big Bank at 8% interest. He lends the money to Freda but she only pays 3% interest to Rick.
Required:
Using relevant legislation and case law to explain your answer, please answer both questions:
(a) Explain to Rick whether the amounts in the above-mentioned transactions would or would not be allowable deductions for income tax purposes in the 2019 income year. Show calculations where appropriate.
