QUESTION 1- (15 MARKS)
John has applied and been approved a licence to operate a casino in Melbourne, which later on he
named it The Casino East. John has received 10-year licence from Victorian Government to operate
the casino. He also received approval for Casino’s building for a long period of time (90 years).
John was instructed by the relevant Government agency to pay $180 million for the approved
casino’s licence and $80 million as prepaid rent covering the first 10 years of casino’s rental. John
has negotiated to pay $400,000 rental per year for the remaining 80 years of the lease.
With reference to relevant legislation and case law discuss whether casinos prepaid rent is
considered a revenue expense or a capital expense.
QUESTION 2 – (10 MARKS)
Alex Kingsford is a mechanical engineer working for ABC Engineering in Melbourne. Alex owns a
property in Dandenong, Victorian where he and his family are residing. He also runs a homebased food catering business, preparing food for local residents and school canteens. Catering
business is well-structured. Alex works 15 days a month and earns a substantial income from the
catering services business. He is travelling from ABC Engineering workshop to his homebased business by car or sometimes Uber. When he lodged his tax return in July 2019, he has
HI6028 Taxation Theory, Practice and Law Individual Assignment T1.2020 4
requested a deduction for a substantial amount of travelling expenses between the ABC
Engineering workshop and home-based food business.
Alex is now seeking your advice. With reference to relevant legislation and case law discuss
whether Alex’s travelling expenses between the ABC Engineering workshop and his homebased catering business is an allowable deduction.