Question no 01:

The Tax treatment is as follow:

 The Only sum that can be demanded is 20,000/-The Interest Expense is still deductible under
s-8of ITAA97, which hold that provision are not deductible, only the actual amount paid in
any financial year.
 The disbursement of insurance premium for a period of 12 months on 01 June would
establish prepaid expense. The deduction would need to be allocated over 12 months period
that is over two years.
 These expenses are deductible in current financial year on the basis that the expenses have
been incurred although not actually paid. Expenses can be demanded on an accrual basis
and yet income and be documented on a cash basis.
 This expenses is deductible for an SBE taxpayer even if it spread over two financial year as it
dose not exceed 12 months.however if thay not register as an SBE taxpayer then thay will
only be able to clam 1/12 of the payment namely $1,000 in the current financial year and
$11,000 in the following financial year.
 (e) This expense is deductible even though the amount compensated mention to the next
financial year as it will decrease upcoming expenses. The authority for this statement is
Nevill and Co v FCT (1937) 56 CLR 290 (f) The interest expense is still deductible under s 8-1
of ITAA97, even though the income- produ