Jill is a tax resident of Australia. In the year of tax ended 30 June 2021, she
Question:
Jill is a tax resident of Australia. In the year of tax ended 30 June 2021, she had the following transactions:
1. She purchased a block of land which has hardwood timber growing on the land. She specifically purchased the land for the purposes of selling the timber for a quick profit. In the current year of income Jill entered into an arrangement with Jack, a timber merchant, for the sale of the timber. The agreement with Jack provided that Jill will sell all the timber to Jack and that Jack has the right to cut and remove the timber from the land. Jack agreed to pay Jill $20,000 on signing the contract on 4 September 2020 and also to pay her $50,000 for each of the next three years. Jack will make the payments even if he does not harvest the timber.
2. Working as a full-time accountant during the day, Jill entered a talent contest on a TV show where she showed case her talents as a stand-up comedian. As prizes she received a cruise (market value $10,000) for winning the heat and a trip to the USA (market value $20,000) plus $5,000 cash for winning the final. She had to win a number of heats in order to progress to the grand final. Jill had performed as a stand-up comedian at clubs in the past but she has never made more than $1,000 in any one year. She now finds that after winning the TV show contest, she has sufficient work for a full time career.
3. Jill sold an artwork for $17,500. She had bought the artwork in 2011 for $10,000 and spent $2,000 to insure it. She kept the artwork at home. She also lost her personal laptop during the year which she had purchased for $1,500.
Explain the income tax, including any CGT, implications of the above transactions for Jill You must cite relevant sections, case law and tax rulings in support of your answer.
Expert Answer:
The income tax implications of Jills transactions are as follows 1 The sale of t... View the full answer
