this is a taxation question,i do not know how to answer
HAND IN QUESTION 2
WEEK COMMENCING 26 SEPTEMBER 2016
TO BE HANDED INTO YOUR TUTOR IN TUTORIAL CLASS FOR THAT WEEK
NO MORE THAN 1000 WORDS QUESTION 1: NML Ltd is a public gold mining company that is
exploring for gold in the Ballarat and the Bendigo
Geoff is the managing director and he seeks your
advice as to the deductibility of the following expenses
which were incurred prior to 30 June 2016:
1. The payment of rent for a staff member when he
is staying in Bendigo. He normally lives in
Melbourne. The cost was $195 per week for 12
2. The purchase of gold tenements for $259,035
which gives the company the right to prospect for
gold in that area for three years.
3. The payment of legal fees to settle a dispute with
information from the company. This cost the
4. The company was fined by $25,000 by the
Environmental Protection Authority for polluting
the rivers in Bendigo and for not rehabilitating the
land after exploration. In addition to this, the
company paid $12,000 in legal fees in defending
the action in court.
5. As a result of this, the company sponsored the local football club with
$5,000 to try and restore its good name in Bendigo.
6. The company also paid a lump sum of $55,000
to a contract drilling company. This payment was
for the next 11 months of services and was paid
on 12 May 2016.
The above figures are all exclusive of GST. Advise
Geoff of the income tax consequences of each of the
above items for NML Ltd, where appropriate provide relevant case law, ATO rulings and section references
to support your answer. (7 marks)