Dorothy is a retailer who sells predominantly electrical goods. On 20 June of th

Question

Dorothy is a retailer who sells predominantly electrical goods. On 20 June of the current tax year she donated an electric heater to the Royal Society for the Prevention of Cruelty to Animals Australia Inc (an eligible gift recipient). Dorothy originally purchased the heater for resale in her business for a cost of $600 on 1 April of the current tax year. The heater had a market selling value of $685 and replacement cost of $650 when it was donated. What amount can Dorothy claim as a tax deduction for the donation under s 30-15 ITAA 97? Select one: 1. $85. 2. $650. 3. Nil. 4. $685. 5. $600.

A balancing adjustment event will not occur in which of the following situations?

Select one: 1. Where the owner of a depreciating asset sells that item. 2. When a depreciating asset is stolen. 3. You stop using a depreciating asset and never expect to use it again. 4. Where a depreciating asset is traded in for a new depreciating asset. 5. Where a depreciating asset is split into 2 separate depreciating assets.

Explanation / Answer

Solution 1:

As per taxation provisions, "If the gift is an item of your trading stock, that you disposed outside ordianry course of business, the market value of the item on the day you made the gift" will be deductible

Hence Dorothy claim tax deduction for donation amouting $685.

Hence option 4 is correct.

Solution 2:

Balancing adjustment event will not occur "You stop using a depreciating asset and never expect to use it again"

Hence option 3 is correct.

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