{"id":435,"date":"2021-04-20T00:19:18","date_gmt":"2021-04-20T00:19:18","guid":{"rendered":"http:\/\/www.trakaccountants.com.au\/blog\/?p=435"},"modified":"2021-07-19T05:44:39","modified_gmt":"2021-07-19T05:44:39","slug":"a-client-purchased-a-franchise-can-this-be-claimed-as-general-business-deductions-against-his-other-business-income","status":"publish","type":"post","link":"https:\/\/www.trakaccountants.com.au\/blog\/a-client-purchased-a-franchise-can-this-be-claimed-as-general-business-deductions-against-his-other-business-income\/","title":{"rendered":"A client purchased a franchise. Can this be claimed as general business deductions against his other business income?"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Question<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A client purchased a franchise (that is, a right to operate as a franchise in a certain area).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The client did not go ahead with the franchise business but did spend $25,000 on the purchase.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Is the $25,000 capital or is can this be claimed as general business deductions against his other business income?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The client operates a partnership of two individuals.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Answer<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The right acquired under the franchise agreement is a CGT asset; therefore, you can&#8217;t claim a deduction for the acquisition, disposal or termination of that right.&nbsp;<br><br>A capital loss should be available to each joint owner under CGT event C2 (<a href=\"http:\/\/classic.austlii.edu.au\/au\/legis\/cth\/consol_act\/itaa1997240\/s104.25.html\">section 104-25<\/a>) when the franchise agreement comes to an end. Incidental expenses which relate to the acquisition of the rights under the franchise arrangement (e.g., legal fees etc.) together with the acquisition cost should also be included in the cost base of the asset for CGT purposes.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A client purchased a franchise (that is, a right to operate as a franchise in a certain area). The client did not go ahead with the franchise business but did spend $25,000 on the purchase.Is the $25,000 capital or is can this be claimed as general business deductions against his other business income?<\/p>\n","protected":false},"author":2,"featured_media":438,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":"yes","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[39],"tags":[41,40],"class_list":["post-435","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-qas","tag-deduction","tag-franchise"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>A client purchased a franchise. 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