Lilly works in marketing. In January 2020, as Covid-19 started to become more widespread globally, Lilly saw an opportunity to be entrepreneurial. Her mother, who was a doctor had recently retired from her private practice. Lilly had offered to help her clear out her practice and to dispose of all the items that she no longer had any use for. Among these items were personal protective equipment (PPE) such as face masks. As Lilly's mother had no other purpose for the PPE, and wanted the storage space for other items, she was happy to let lilly have the PPE for free. lilly immediately sold these items of PPE to her friends for a relatively modest amount.

In a separate transaction, lilly made a large order of masks from China at a low price. Therefore, by the time Covid-19 became more widely spread in NZ, lilly was able to start selling her masks online on a website she created, and make a significant profit. Lilly was only able attempting this once, as her supplier was no longer able to ship the masks to New Zealand.

1. Are any of the two transactions outlined above would constitute income under section CB 3 of the New Zealand income tax (ITA) act 2007

2. Are any of the two sales transactions outlined above would constitute income under section CB 4 of the ITA 2007.

Answer rating: 100% (QA)

1 Under section CB 3 of the New Zealand Income Tax Act 2007 ITA income is defined broadly and includ... View the full answer