MLC301 Principles of Income Tax Law - Assessment Questions

QUESTION 4. 12

Explain how the following expenses would be treated under the ‘business entity test’. Note the different taxation effects of the different forms of holding assets.
(a) Costs of purchasing a new shop to operate a retail business.
(b) Interest paid on the money borrowed to purchase the new shop.
(c) Costs of leasing a shop to operate a retail business.
(d) Costs of leasing a motor vehicle that will be used for business purposes only and can be acquired at the end of the lease for a fraction of its market value.