Question: 3 Question 5 (4 points) Required: Discuss whether the $10 million constitutes ordinary income (4 marks). Glass Pty Ltd is a manufacturer of special scratch-proof

3 Question 5 (4 points) Required: Discuss whether the $10 million constitutes ordinary income (4 marks). Glass Pty Ltd is a manufacturer of special scratch-proof glass that it sells to overseas mobile phone manufacturers. It has a 5 year contract to buy a special essential ingredient used in the glass from the sole worldwide seller of this ingredient, TG Ltd. 3 years into this contract, TG Ltd cancels the contract and pays Glass Pty Ltd $10 million in compensation. This $10 million was based on a calculation of the amount of loss of profit that Glass experienced due to the contracts cancellation. Due to a lack of the special ingredient, Glass Ltd transitions to being a conventional manufacturer of automobile windscreens.

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