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Discussion on Assessable Income for Australian Tax Purposes

Question

(a)    Michelle ran her own accountancy business.  During the year she was persuaded to change premises which she ran her business from, and which she rented.  A new building not far from where she ran her business had been completed.  The owners of this new building agreed to give to Michelle $45,000 over 12 months if she agreed to move to their premises.  Michelle accepted this offer.

(b)     Roger was a tax adviser.  He had a very wealthy client who asked Roger for some advice on how best to structure a new business the client was starting up.  As a result of the advice given the client paid 15% less tax than had been paid in the past.  The client paid Roger the fee of $7,000 he had charged.  Because he was very pleased with the advice he had been given he also gave Roger another $2,000 as well as the $7,000.

(c)     Bill & Ben Cookies had a number of agreements with overseas companies to produce selected biscuits from each overseas company’s biscuit range in Australia.  One of these companies, Wharfdale biscuits, wrote to Bill and Ben Cookies stating it wanted to withdraw the right of Bill and Ben Cookies to produce its biscuits.  After much negotiation it was agreed Bill and Ben Cookies would cancel their agreement with Wharfdale and not produce any of Wharfdale’s biscuits in Australia. Wharfdale paid Bill and Ben Cookies $70,000 on the 30th September for cancelling the agreement.

Discuss whether the amounts referred to in each question are assessable income for Australian tax purposes.  Fully explain your answer.

Summary

This question belongs to taxation law and discusses about assessable income for a country tax purposes in different given cases.

Total word count: 918

 

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