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Simon has operated a carpet cleaning business for several years. On 1 May 2021 he...

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Finance

Simon has operated a carpet cleaning business for several years. On 1 May 2021 he paid $13,000 to replace the damaged engine in his commercial carpet cleaning machine. The replacement engine generates 2500w of power while the old engine delivered 1750w of power. The cleaning machine was purchased on 4 June 2017. Assuming that Simons accountant advised him that he could not claim a deduction for the $13,000 as a repair under sec 25-10 of the Income Tax Assessment Act 1997, for which of the following reasons would his accountant have given this advice?

The repairs were terminal repairs.

The repairs constituted a significant improvement to the cleaning machine.

The repairs were notional repairs.

The engine constituted an entirety and was an asset in its own right.

The repairs were initial repairs.

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