Tall 5551 Class Assignment

Class Assignment

Question 1

Discuss whether the amounts below would be regarded as ordinary income? Provide reasons for your answers and ignore any statutory provisions other than s 6-5 of the ITAA 1997 that may be applicable.

• a)  A diamond ring worth $5,000 found in the lounge area of Sydney Airport?  
• b)  A monthly payment of $125 received by one parent from another as a child support  payment?  
• c)  A damages award of $15,000 to compensate for pain and suffering received after being  involved in a car accident?  
• d)  $200,000 embezzled from an employer?  
• e)  $5,000 won betting on a horse race?  
• f)  A gift of $5,000 received from a relative?  
• g)  The proceeds of selling a reconditioned car?  
• h)  A $200 discount on a new computer?  
• i)  The proceeds of sale of the premises from which a shoe store operates?  
• j)  The proceeds of sale of twelve pairs of shoes from the shoe store?  

Question 2

The High Court of Australia held in Commissioner of Taxation v Whitfords Beach Pty Ltd (1982) 150 CLR 355 that a company, Whitfords Beach Pty Ltd,(Whitfords Beach) derived ordinary income when it sold land it had purchased many years before for private purposes.

The case involved a group of fisherman who had formed Whitfords Beach in 1954 for the purpose of having Whitfords Beach acquire a strip of land to ensure access to certain beachfront shacks owned by the fishermen. In 1967, in order to secure the land, three development companies acquired the shares in Whitfords Beach. Subsequently, the land was sold by Whitfords Beach.

• a)  In their deliberations and conclusions, what importance did the High Court attach to the sale of the shares?  
• b)  Would the company have been taxable if it had sold the land while it was still owned by its old shareholders?  

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Question 3

Why have the courts decided that the costs between travelling from home to work and the costs of childcare are not deductible?