Q 5.

a) Yes, since its cash, paid regularly and a real gain.

b) Yes, since salary in an ordinary income and compensation for the loss is salary it is
considered an ordinary income
c) No, a present is not a flow from services and is not regular. Even though it might be
cash convertible, it is not an ordinary income.
d) No, even though it is cash and a real gain, it doesn’t flow from services.
e) ?
f) No, even though it is cash and a real gain, it doesn’t flow from services or property.
g) Yes, since the payments are regular and

5.3

The payments are cash and a real gain which satisfy the 2 prerequisites of ordinary income.
Vacant block of lands: the payments are regular and flows from the business. As the taxpayer
does not sell any assets it is an ordinary income.
House and land packages: the payments are regular and flows from the business. As the
taxpayer does not sell any assets it is an ordinary income.
Land: The sale of land is not regular and does not come from business or property. The sale is
the disposal of the assets and therefore is not an ordinary income.

6.1
1. salary and wages are rewards for services and therefore is ordinary income
2. Interest on bank is ordinary income
3. Rent is an ordinary income
4. winning gains are primary depended on luck and therefore is not an ordinary gain
5. It depends whether selling eggs is the primary activity or
6. a goliday bonus is the reward for services and therefore is an ordinary income
7. If the watch is a personal gift then it is not an ordinary income

6.2

Sally: her 100$ is not an ordinary income since she just appeared once

Jane: The trip is not cash convertible and not ordinary income, however the cash prizes and
household appliances are ordinary income since she appeared 10 times on the show and it
could be argued that it is regularly.
6.6

It could be argued that the watch gift is not an ordinary income as it does not have a nexus
and wasn’t expected since Albert was fully paid for his job. On the other hand, there was no
reason for Frederick to gift such an expensive gift as it wasn’t said they have personal
relationship between each other (Scott v FCT (1966) 117 CLR) so it could be argued that the
watch is an ordinary income since it came from the services provided.

Q 8.3

The first strand of myer does not aplly as Peter did not have an intention to make a profit
through the sale.
Due to the development and low Peter’s involvement in the sale, it would probably not be
treated as an ordinary income as shown In Statham v FCT case.
Q 8.4

Since bruce undertook the development, FCT whitfords cannot be applied. It is possible that
the first Myer strand can be applied as Bruce bought this land with the intention to profit of it
even though it never came to realisation.

Q 8.6

As shown in prince v FCT, the gambling would probably be the part of the business.

Q8.7

The payments would be considered under s15-10 and constitute ordinary income since pierre
received payments to carrying on a business.

Week 5

Q 9.3 Your client was injured in a work-related accident and has received damages of
$300,000 for the loss of his ability to work. In the final judgment the Court awarded $12,000
in pre-judgment interest and $5,000 in post-judgment interest. Which amounts, if any, are
assessable income?
None of the income would be accesable income due to Whitaker v FCT (1998) 38 ATR 219
stated that pre-judgment interest was not ordinary income, but capital. $300,000 would also
be disregarded for CGT purposes: s 118-37(1)(a)
Q 9.2
The guarantee payment is compensation for not receiving rent

Question 9.5 Your client has just written his first book of his experience as a hostage of a
terrorist group. He spent the last two years writing the book and he has received two offers
from a publishing company that wished to publish his book. The first offer is to purchase the
copyright for a lump-sum payment of $10,000 provided your client gives up future claims to
the copyright and royalties. The second offer is to pay 10% of the sale price of each book
sold provided your client agrees to assign the copyright in the book to the publisher for 10
years. Discuss the effect on assessable income of each of the two offers.

First offer: under the first strand of Myer, the client would have had to enter this transaction
with an intention to profit. the first strand of Myer could be applied to the $10,000 as
ordinary income, but if this is not the case, the $10,000 would be subject to CGT.

Second offer the client has used books to earn income as a royalty, which will be ordinary
income under s 6-5 of ITAA97.

4.3
He has stable living, working arrangements in Australia and is undertaking a relatively long
work assignment in Australia. in TR 98/17 the 6 months is a sufficiently long period of time
to satisfy the common law “resides” test.

4.4 Jenny is an accountant who works in Hong Kong. She is single and lives in Hong Kong
with her parents. Until April 2019, her work does not involve travel. At that time she accepts
an offer from her employer to travel temporarily to Australia to provide business advice to
large numbers of former Hong Kong residents setting up businesses in Melbourne, Sydney
and Brisbane. Jenny enters Australia on 25 April 2019. She intends to spend three months
travelling between the three cities, staying in various motels. Her employer asks
hertowardsthe end of her three months to take up a position in Sydney for a further nine
months. In early July, she leases a serviced executive apartment for nine months near her
workplace in Sydney. The apartment is her home base during her stay here. She freights more
clothing and some personal effects to Australia. Her parents visit her on two occasions.
Although based in Sydney, her commitments require some limited travel. On average, Jenny
travels at least once a week to meet clients outside Sydney. Is Jenny a resident of Australia
for tax purposes?

She is doing job in Sydney for 9 months. She has home base in the Sydney. Her parents
visited Australia during her presence. She leaves an apartment in July that was near the
workplace. Her habitual and routine work for her jo