QUESTION 1- (15 MARKS) (800 words) John has applied and been approved a licence to operate a casino in Melbourne, which later on he named it The Casino East. John has received 10-year licence from Victorian Government to operate the casino. He also received approval for Casinos building for a long period of time (90 years). John was instructed by the relevant Government agency to pay $180 million for the approved casinos licence and $80 million as prepaid rent covering the first 10 years of casinos rental. John has negotiated to pay $400,000 rental per year for the remaining 80 years of the lease. With reference to relevant legislation and case law discuss whether casinos prepaid rent is considered a revenue expense or a capital expense. Marking criteria Weighting Question 1 - Identification of material facts (issues) regarding Johns prepaid rent. 2 marks Identification and analysis of legal issues / legal question and relevant taxation - law in regards to casinos rental (e.g. ITAA 1936 and ITAA 1997). (2 marks) -Thorough yet succinct application of tax law (e.g. ITAA 1936 and ITAA 1997) to material facts in Johns case. (2 marks) - Detailed and accurate identification of the lump sum rental payment are reached. ( 3 marks) - Correct information and taxation law have been used and properly cited. A detailed analysis has been performed. ( 3 marks ) - Ability to show excellent understanding of the cases and/or section of legislation, its context and application of taxation law. (3 marks) QUESTION 1 TOTAL MARKS: 15 marks