Thursday 26 March 2015

Sample exam question 1 - March 2015

Your answers to the following questions should be concise and should be supported by reference to relevant taxation law.

Question:

Owing to competition from a nearby food mall, Polly’s pie shop had to close down permanently at the end of the previous income year. However, in the current income year Polly is still required to make repayments on a loan she had taken out three years ago to provide working capital for the business. These loan repayments amount to $12,000 for the current year, comprising principal of $8,000 and interest of $4,000. Advise Polly whether she may deduct any of these amounts for income tax.

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