Question

Furnaces Pty Ltd was advised by a local building inspector that one of the chimneys on its premises was unsafe and, unless it was repaired, the factory would have to be closed. Furnaces decided that it was not feasible to stop operations to repair the chimney, so they gained permission to build an alternative chimney adjacent to the old chimney, thereby allowing production to continue. They found that although the new chimney was substantially the same size and make as the old one, it was cheaper to build than it would have been to repair the old one. Also, the new chimney can better ventilate the weather, which was not available in the previous one. After the new chimney was erected, the old chimney was demolished.

Is any amount allowable as a deduction for the cost of the new chimney?( 500 WORD)

Answer 1

Answer- Below things are necessary for the understanding of any student:

General Deductibility Rules for Repairs Student knows how to use the ITAA 1997, know how to apply the law to the Furnaces' deductibility of the commercial kitchen expenditure. Very good identification of the Furnaces' deductibility of the commercial kitchen expenditures and discussion of the issues. Majority of relevant issues identified and discussed in relation to the given scenario. The area of deduction law is correctly identified but the statement does not clearly describe the legal problem/s and conclusions that need to be addressed in relation to the given scenario. The relevant area of law in relation to the given scenario is not identified.
Identification of the case assisting in decision making in this question. The relevant legal case in relation to the Furnaces' deductibility of the chimney expenditures is clearly explained and their correct source of authority is given. Similar yet relevant legal case in relation to the Furnaces' deductibility of the chimney expenditures is clearly explained and their correct source of authority is given. Close enough yet relevant legal case in relation to the Furnaces’ deductibility of the chimney expenditures is clearly explained and their correct source of authority is given. Some identification of legal case in relation to the Furnaces’ deductibility of the chimney expenditures is explained but their correct source of authority is not given. No relevant legal cases in relation to the deductibility of the given scenario have been identified and no correct source of authority is given.
Thorough yet succinct discussion on considerations required for repairs The discussion is a clear and comprehensive analysis of the relevant legal principles in relation to the Furnaces’ deductibility of the furnace expenditures. Very good discussion and analysis of the relevant legal principles in relation to the Furnaces' deductibility of the furnace expenditures. Good discussion and analysis of the relevant legal principles in relation to the Furnaces' deductibility of the furnace expenditures. The discussion considers some of the relevant legal principles but does not apply those principles to the key facts to support logical arguments in relation to the given scenario. The discussion of the facts does not refer to any relevant capital gain legal principles in relation to the given scenario.
Thorough yet succinct discussion on occasions where expenses are not considered as repairs and therefore, no deduction is available. All relevant legal principles in relation to the Furnaces' non-deductibility of the chimney expenses is clearly explained and their correct source of authority is given. Most of the relevant legal principles in relation to the Furnaces' non-deductibility of the chimney expenses is clearly explained and their correct source of authority is given. Some of the legal principles in relation to the Furnaces' non-deductibility of the chimney expenses is clearly explained and their correct source of authority is given. Few identifications of the legal principles in relation to the Furnaces' non-deductibility of the chimney expenses is clearly explained but the correct source of authority (section of Act or relevant case) has not been cited. No relevant legal principles in relation to the given scenario have been identified.
Apply the rules and cases above and provide conclusion on deductibility of expenses. Student knows how to use the ITAA 1997 in relation to the Furnaces' deductibility of the chimney expenditures, and know how to apply the law in a real scenario. Very good identification of the consequences in relation to the Furnaces' deductibility of the chimney expenditures and discussion of the issues. Majority of relevant issues identified and discussed in relation to the given scenario. The area of law in relation to the Furnaces’ deductibility of the chimney expenditures is correctly identified but the statement does not clearly describe the legal problem/s and conclusions that need to be addressed. The relevant area of law in relation to the given scenario is not identified.