Question
QN Ltd was a mining company based in Australia. Because of financial difficulties it ceased operations and went into liquidation.
During the year before its liquidation QN Ltd made the following payments:
A sum of $ given to a political party.
A payment to the company solicitors of $ to defend action against the company for breaching Environmental Protection issues.
The company was eventually fined $ for the above breaches.
A salary of $ to the wife of the Managing Director of the company for acting as the bookkeeper. His wife is not a qualified accountant and only spends hour a day in the office. A reasonable salary for this role based on the hours worked would be $
A claim for faulty products that was paid after the company ceased operations of $
REQUIRED: Advise the company whether the above amounts are allowable deductions. In your answer you must refer to relevant case law and legislation.
