Corey has been working as an employee for a computer company for the past 12 years. In April 2020, Corey resigns and decides to go set up his own computer consultancy business. 

Corey incurs the following items of expenditure:

(a) Feasibility costs (including market research and preparation of a business plan) of $2,600 incurred on 16 March 2020 in deciding whether to proceed with the business venture or not;

(b) Costs of $620 paid to incorporate a company "Computer Consultants Pty Ltd" on 18 April 2020;

(c)Registration of a business name "Corey's Computer Solutions" with the Queensland Office of Fair Trading on 21 April 2020 costing $125;

(d)Legal fees of $2,500 paid to a lawyer on 24 April 2020 for advice given in relation to the legal issues involved in setting up his business; and

(e) Printing of business cards, stationery and letterhead costing $220 on 11 May 2020.

Coreygets his first customer on 13 May 2020 and sends hisfirst invoice to thecustomer on19 May 2020 for $2,200 in relation to work performed from 13 May 2020 to 18 May 2020.

Assume that Corey's company, Computer Consultants Pty Ltd, is considered a large business entity for taxation purposes as it expects to turnover in excess of $10 million in its first year.  

Required:

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 itemsisdeductible, and if so,what amount would be deductible for each itemin respect of the year ended 30 June 2020? Please quote appropriate references to relevant sections of the ITAA (1936) and ITAA (1997) in your answer. 

Answer rating: 100% (QA)

i The date that Coreys business is regarded to have started for income tax purposes would be 13 May ... View the full answer