zeta recently purchased a milk bar business. Xan she claim a deduction under s40-880 ITAA97 for...
zeta recently purchased a milk bar business. Xan she claim a deduction under s40-880 ITAA97 for the amount paid under the contract to acquire the goodwill of the business?
Homework Answers
No, Zeta cannot claim a deduction under s40-880 ITAA97 for the amount paid under the contract to acquire the goodwill of the business.
This is because the proposed subsection 40-880(6) operates to allow businesses to claim expenditure incurred to preserve the value of goodwill provided that:
- The expenditure is in relation to the acquisition of a legal or equitable right; and
- The value of the right is solely attributable to the effect that the right has on goodwill.
Expenditure incurred to acquire goodwill or enhance the value of goodwill will be excluded from deduction under section 40-880.
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