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Corey has been working for a computer company for the past 12
Corey has been working for a computer company for the past 12 years. In April 2016, Corey resigns and decides to go into business for himself. He incurs the following amounts:
Feasibility costs (including market research and preparation of a business plan) of $2,600 incurred on 16 March 2016 in deciding whether to proceed with the business venture or not;
Costs of $620 paid to incorporate a company ?Computer Consultants Pty Ltd? on 18 April 2016;
Registration of a business name ?Corey?s Computer Solutions? with the Office of Fair Trading on 21 April 2016 costing $125;
Legal fees of $2,500 paid to a lawyer on 24 April 2016 for advice given in relation to the legal issues involved in setting up his business; and
Printing of business cards, stationery and letterhead costing $220 on 11 May 2016.
Corey gets his first customer on 13 May 2016 and sends his first invoice to the customer on 19 May 2016 for $2,200 in relation to work performed from 13 May 2016 to 18 May 2016.
Assume that Corey's company, Computer Consultants Pty Ltd, is considered a large business entity.
Advise Corey with regards to the following:
(i) The date that his business is regarded to have started for income tax purposes, and
(ii) Whether each of the abovementioned items is deductible under the ITAA (1997) and if so, what amount would be deductible for each item in respect of the year ended 30 June 2016?
Please quote appropriate references to relevant sections of the ITAA (1936) and ITAA (1997) in your answer.
This question was answered on: Feb 21, 2020
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