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Explain how the following expenses would be treated under the ‘business entity test’. Note the different taxation effects of the different forms of holding assets.
(a) Costs of purchasing a new shop to operate a retail business.
(b) Interest paid on the money borrowed to purchase the new shop.
(c) Costs of leasing a shop to operate a retail business.
(d) Costs of leasing a motor vehicle that will be used for business purposes only and can be acquired at the end of the lease for a fraction of its market value.
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