When Ben Jones decided to start his own business, he needed to borrow a large sum. He was able to borrow $200,000 from a bank at a 5% interest rate over a four-year loan period starting on the 1st of September 2019. Ben also incurred other costs amounting to $3,600 associated with the loan. These costs are related to the loan establishment fee, valuation fees, and stamp duty. All of the money borrowed from the bank is used for carrying on his business.

Required:

Is Ben entitled to any tax deduction(s) for the outgoings he incurs in relation to the loan for the year ending the 30th of June 2020? Calculate any deductions.

Answer rating: 100% (QA)

Answer Ben is allowed the deduction in 2020 for only the interest paid on borrowing 200 000 at 5 ... View the full answer