Answer & Explanation

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 The $20 million received from XYZ is considered as an assessable income and must be

included in the returns.

Step-by-step explanation

 It is worth noting that there are two types of business income: gross income and other

business income. The former is generated from routine daily sales transactions of goods

ans services, while the latter is a residual definition of the former that is not done on

everyday transactions. As per QC 44460 "What income to include"  circulated by the

Australian Taxation Office (ATO), the compensation is part of a other business income. 

 Before deepening the concept, discussion on "business" and "business income" is

important. In ATO's Draft Taxation Ruling TR 2017/D7, a company is carrying on a

business based on the following parameters (non-inclusive and non-exclusive):

o Profit-making intention

o Intention of business continuity

o Business-like nature of activities

o Bulk and extent of sales

 Components R Us has apparently passed the first, third, and fourth factors for the

tantamount consideration of the $20 million compensation as business income. Although,

 the second factor is subject to scrutiny, it is undeniable that the income from continuity of

the business has been recouped in a "one-time payment" manner; thus, still an income.

  Your business might get pay that isn't essential for your ordinary business exercises.

These sums should likewise be remembered for your business' assessable pay toward the

finish of the pay year. Comprehensively, the ATO thinks about that if an organization is

set up and kept up with the intent to make a benefit for investors and its resources are

invested in planned steps to make a profit, almost certainly, it will carry on a business

from an overall perspective. The ruling states that an organization is probably not going

to carry on a business when it has no possibility of making a benefit and its exercises do

not have a business character; which in this case, Components R Us does not qualify.