Andrea runs a graphic design business. One day, she lands a major contract with Australia's largest...
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Andrea runs a graphic design business. One day, she lands a major contract with Australia's largest pet store, Pets R Us, to meet all their design needs for the next five years. Pets R Us eventually became Andrea's only client. Andrea did not mind this as they paid well, and their demands were so high that Andrea did not have the capacity to work for any other clients anyway. However, two years into the contract, Pets R Us terminated their agreement. Andrea is paid $240,000 for the breach of contract. Andrea decides to end her business and begins working for a marketing agency. Pets R Us also asks Andrea to not disclose any of the information she may have become privy to while working with Pets R Us, including information about their upcoming marketing campaigns and new product line. Andrea is paid an additional $10,000 for agreeing to this. Please assume that these events took place in the 2022-23 financial year. Andrea seeks your advice as to whether the following will be included in her ordinary income for the 2022-23 financial year: (a) The $240,000 compensation for the breach of contract (b) The $10,000 payment to not disclose information Andrea runs a graphic design business. One day, she lands a major contract with Australia's largest pet store, Pets R Us, to meet all their design needs for the next five years. Pets R Us eventually became Andrea's only client. Andrea did not mind this as they paid well, and their demands were so high that Andrea did not have the capacity to work for any other clients anyway. However, two years into the contract, Pets R Us terminated their agreement. Andrea is paid $240,000 for the breach of contract. Andrea decides to end her business and begins working for a marketing agency. Pets R Us also asks Andrea to not disclose any of the information she may have become privy to while working with Pets R Us, including information about their upcoming marketing campaigns and new product line. Andrea is paid an additional $10,000 for agreeing to this. Please assume that these events took place in the 2022-23 financial year. Andrea seeks your advice as to whether the following will be included in her ordinary income for the 2022-23 financial year: (a) The $240,000 compensation for the breach of contract (b) The $10,000 payment to not disclose information
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In the context of Australian taxation the tax treatment of income depends on its nature and source L... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
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