Week 7 Problem 1 (Assume it is purchased and installed at 1 September 2019) 1 September 2019 – 30 June 2020: $90000x 304/365 x 100%/15 = $4997 1 July 2020 – 1 December 2020 : $90000x 154/365 x 100%/15 = $2531 Total decline in value = $7528 Adjustable value of the machine at 1 December 2020 = $90000 - $7528 = $82472 Termination value (1 March 2021) = $70000 Adjustable value > Termination value ($82,472 > $70,000), excess is deduction. (s40-285(2) Therefore, $12,472 ($82,504-$70,000) is deduction. In addition in the 2021 year $2531 will be deductible for the decline in value Depreciation (diminishing value method): Year 1 (01/09/2019- 30/06/2020) Depreciation is $90,000*305/365*200%/15=$9,995 Adjustable value is $90,000-$9,995 =$80,005 Year 2 (1/07/2020- 1/12/2020) Depreciation is $80,038*154/365*200% /15 =$4,501 Adjustable value is $80,005-$4,501=$75,504 Adjustable value > Termination value ($75,504 > $70,000), excess is deduction. (s40-285(2) ) Therefore, $5,504 ($75,504-$70,000) is deduction. The decline in value = $4501. Problem 2 Division 43 January 25th -June 30th: (12500 x 128 x 25%)/365 = $110 Under s8-1(2a) (Negative limbs) cannot deduct as it is of capital nature General discussion questions 1. 23*5*8*3= $2760 (deductible) S26-35 5000-2760= $2240 (non-deductible) $2240 not assessable $2760 is assessable 26-35(4) To the extent that subsection (1) stops you deducting an amount, the amount is neither assessable income, nor exempt income, of the * related entity. 2. TR 2005/13 $20 per month is deductible $100 is not 3. Division 26 Amounts you cannot deduct or cannot deduct in full Penalties: s 26‐5 Penalties (1) You cannot http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s995.1.html#deduct http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s995.1.html#under ht tp://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s995.1.html#this_act: (a) an http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s99 5.1.html#amount (however described) payable, by way of http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s40.1035.html#pen alty, http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s995.1.html#und er an * http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s995.1.html#austral ian_law or a * foreign law; or (b) an http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s99 5.1.html#amount ordered by a court to be paid on the conviction of an http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s995.1.html#entity for an offence against an * http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s995.1.html#austral ian_law or a * foreign law. (2) This section does not apply to an http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s995.1.html#amou nt payable, by way of http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s40.1035.html#pen alty, http://classic.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s995.1.html#und er Subdivision 162-D of the * GST Act. s 26-5