Read the following scenarios. A commercial coffee machine retailer received a new coffee machine in June 2017

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Question:

Read the following scenarios.

A commercial coffee machine retailer received a new coffee machine in June 2017 as a prize supplied by a manufacturer for selling the highest value of the manufacturer’s products during the past six months. The coffee machine retails at $3,500 and normally would have cost the retailer $1,800 to acquire from the manufacturer. The retailer uses the prize to replace the existing coffee machine in her private residence.

Advertising Agency Ltd received $20,000 on 15 March 2017 as compensation for the cancellation of an agency contract. The loss of the contract caused the company some loss of prestige but there was little change in the company’s general organization. The company has 20 other major clients.

John Jackson purchased land in 1984 for $200,000. On 1 January 2007 Jackson gifted the land to his wife. The value of the land at the time of the gift was $620,000. On 1 July 2016, the land was rezoned “residential”. On 1 February 2017 Jackson’s wife sold the land for$800,000.

Larry Sheen is a promising executive employed by a company marketing computer software. His employer paid his subscription of $1,250 to the local golf club on 1 March 2017. Sheen advises you that he cannot play golf and is only likely to use the club facilities for entertaining business clients.

Jacinta Jacobs, a university lecturer, undertook a research project in Denmark for eight weeks from 1 August 2016, Jacobs’s contract provided that she was to receive $20,000 less expenses, all of which were to be paid for by the contractor in Denmark. On completion of the project the contractor paid Jacobs $5,400 comprising the $20,000 as agreed, less expenses $14,000 and Denmark Government tax of $600.

Assume all amounts are in Australian dollar equivalents.

Required:
Discuss the extent to which assessable income arises in the following circumstances with reference to ITAA 1997, ITAA 1936 and any relevant cases. Number each of your responses.