Exam 8: Capital Allowances

Very Big Mining Ltd is a large business taxpayer with an aggregated turnover of more than $500 million per year. During the year ended 30 June 2020 the company purchased the following items: 1. Mining truck (effective life of 5 years) on 1 July 2019 for $350,000; 2. Mining equipment on 1 August 2019 for $220,000 (effective life of 8 years) and 3. Mining equipment (effective life of 10 years) on 1 June 2020 for $180,000. Very Big Mining Ltd always uses the diminishing value (DV) method to calculate its decline in value. What decline in value can the company claim for the year ended 30 June 2020?

Massive Pty Ltd is a large corporate entity with annual turnover of $90 million. What is the maximum deduction that can be claimed by Massive Pty Ltd at the end of the 2019-20 tax year in relation to the following items? A computer costing $4,500 acquired on 1 July 2019 (effective life self-assessed as four years). Costs of $10,000, incurred in raising equity for the business via a prospectus in May 2020.

AZE IT has developed some software internally and it chooses to place the costs of this internally developed software into a software development pool. Which of the following statements about the software development pool are incorrect?

Fast Express Couriers Pty Ltd is a courier business but which is not a small business entity. On the 1 July 2019, it acquired two new vans each costing $22,000 (each with an 8-year life) and some office equipment costing $14,000 (5-year life) for 100% use in the business. What can Fast Express Couriers Pty Ltd claim in relation to the purchase of the above assets for the 2019/20 tax year?

RG Wholesalers Pty Ltd is a small business entity and as at 1 July 2019 had an opening balance of its general small business pool of $120,000. During the 2020 tax year the company purchased new equipment for $45,000 on 1 December 2019 and for $60,000 on 1 May 2020. The company disposed of an old machine and received $5,000 for its disposal. What is the closing balance of the company's general small business pool as at 30 June 2020?