Sadiq, K. et al., 2019. Principles of taxation law 2019, Thomson Reuters (Professional) Australia Ltd.
CHAPTER 9 – INCOME FROM PROPERTY
Your client has invested $10,000 in a savings bond that matures in five years’ time and pays interest
at 8% pa, but the interest is paid as a lump sum on the redemption of the bond in five years’ time.
How will the interest be treated for income tax purposes?
Your client has purchased an investment apartment that has a rent guarantee from the developer of
5% pa for a period of four years. During the current financial year your client has been unable to rent
the apartment, so she is relying on the rent guarantee payment to compensate her for not being
able to find a tenant. The developer is due to pay the amount as a lump sum and your client is not
sure whether the amount is income. Advise her.
Your client was injured in a work‐related accident and has received damages of $300,000 for the loss
of his ability to work. In the final judgment the Court awarded $12,000 in pre‐judgment interest and
$5,000 in post‐judgment interest. Which amounts, if any, are assessable income?
Your client makes most of her income from writing hit songs for various performing artists and
receives a large amount of royalties from overseas record companies. Is this assessable income and
how will it be taxed?
Your client has just written his first book of his experience as a hostage of a terrorist group. He spent
the last two years writing the book and he has received two offers from a publishing company that
wished to publish his book. The first offer is to purchase the copyright for a lump‐sum payment of
$10,000 provided your client gives up future claims to the copyright and royalties. The second offer
is to pay 10% of the sale price of each book sold provided your client agrees to assign the copyright
in the book to the publisher for 10 years.
Your client is a parent who lent $40,000 to her son to provide a short‐term housing loan. The
agreement is that the son will repay $50,000 at the end of five years.
Reconsider this question in light of the following facts. The loan was made to the son without any
formal agreement and without any security provided for the sum lent. In addition, the client (the
mother) has informed you that she told her son that he need not pay interest. However, the son
repaid the full amount after two years and included in his payment an additional amount which was
equal to 5% pa on the amount borrowed. Only one cheque was presented for the total amount.
Discuss the effect on the assessable income of the parent.
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