Wave Pty Ltd runs a business in Australia selling confectionery both in Australia and world-wide. During the

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Question:

Wave Pty Ltd runs a business in Australia selling confectionery both in Australia and world-wide. During the year ended 30 June 2022, the company had the following expenses: 1.Purchase of second-hand machinery to make confectionery. The equipment cost $55,000 and was bought on 31 March 2022. 2.Purchase of new car for the chairman of the company. The car cost the company $125,000. The car was purchased on 3 November 2021. The car was only used 65% of the time for work purposes. 3.The company made a provision for bad and doubtful debts of $75,000 in its financial accounts. The actual bad debts written off was $18,000. 4.A competitor confectionery company sued Wave Pty Ltd for breach of copy right. Wave was forced to pay $ 120,000 as compensation to the other company. 5.Due to COVID 19, there was a shortage of staff, so the company employed casual staff. They company paid these casual workers in cash and did not deduct any PAYGW tax from their pay, nor report it to the ATO. 6.To adapt to an online sales environment because of COVD 19, the company closed three retail shops. The cost of closure was paying out outstanding staff wages, and outstanding rent to the landlords. This cost the company $26,000. Note: The numbers above are net of GST.

Required:

Please advise the company whether the above expenses are deductible or not. Where necessary you are required to provide calculations. In your answer you must refer to relevant sections of the Income Tax Assessment Act and also case law.