Explain the tax treatment for Percy as a result of the $600 receipt.

Percy is a cattle farmer in Gippsland. On his farm he has a large river which runs through the paddocks. The river contains a certain organic mud that could be used in beauty products. Simone approaches Percy as she wants to take some of the mud for her skincare business. They enter into an agreement whereby Simone can take as much mud as she wants from the property, and would pay Percy $30 per kg. There was no maximum that could be removed but the agreement stated a minimum of 12kg per annum that would need to be paid regardless of the amount taken. This financial year Percy received $600 in payments for the removal of mud from his farm.

Answer rating: 100% (QA)

Tax treatment Income from sale of mud produce... View the full answer