During the current tax year, Wen received and paid the following amounts:

 

1. Salary and wages income of $98,000. 
2.  $4,200 interest from a bank term deposit of $50,000.
3. $500 per week for 50 weeks of the year from a rental property she owns. 
4. Winnings of $10,000 on the poker machines.
5. $500 from selling eggs that her chickens laid to friends.
6. A holiday bonus of $1,000 from her employer.
7. A watch worth $200 from a happy client.
8. Donation of $300 to the building fund of her local public primary school.
9. Contribution of $50 to her street community garden
10. Payment of $700 professional membership fees

 

Her sister Jan is employed as a schoolteacher and decided to enter a television quiz program called "Lease of the Decade". Under the rules, contestants receive $100 for each appearance, but if questions are answered correctly, they receive substantial cash prizes and other prizes, such as household items and holiday packages. The holiday packages cannot be transferred or redeemed, but the organisers of the program allow them to be converted into alternative venues and accommodations.  

Jan makes 10 appearances. She wins cash prizes of $50,000, household appliances worth $20,000, and a trip to Europe with her family valued at $30,000. 

Jan was in a rush to get to her appearance and was caught speeding.  Jan paid a $190 speeding fine with her credit card. Now Jan takes a train to the local university to study. At the end of the day, they take the train home.

The other family member, Hilary is a well-known mountain climber. The Daily Terror newspaper offers her $10,000 for her life story if she writes it. Without the assistance of a ghostwriter, she writes a story and assigns all her rights, title, and interest in the copyright for $10,000 to the Daily Terror. The story is published and she is paid. She has never written a story before. She also sells the manuscript to the State Library for $5,000 and several photographs that she took while mountain climbing for which she receives $2,000.  

Hilary spends $1000 on airfares to climb mountains during the year. Hilary also spent $500 on protective clothing for the climbs. 

Required:  Please determine whether these items qualify as assessable income or allowable deductions for Wen, Jan, and Hilary. 

Write a report presenting your answer to the above questions. In your report, identify, analyze, interpret, and apply the rules and principles attached to key areas of taxation law and in so doing defend and justify your answers. You will need to clearly identify specific sections of the tax law that applies to each of the above situations.  

Answer rating: 100% (QA)

In order to determine whether the various items received and expenses incurred by Wen Jan and Hilary qualify as assessable income or allowable deductions for tax purposes we will need to analyze each ... View the full answer