Question

In: Accounting

Henry, a tax resident of Australia, was a famous jazz singer who passed away recently. Jack,...

Henry, a tax resident of Australia, was a famous jazz singer who passed away recently. Jack, a publisher was interested on Henry's life story and wanted to write a bibliography on Henry's life. Jack approached Henry's wife, Jenny (also a tax resident of Australia) to interview her on Henry's life story. She was offered $1 million for Henry story. Jenny was paid $500,000 deposit before the interview. After the interview she was paid the balance of the money. Would the tax consequences have changed if Jenny had written the book herself?

Required: Advise Jenny on her tax consequences. You must cite the relevant case law and legislation

Solutions

Expert Solution

Is Jenny liable for tax on the interview?

What is the nature if the receipt?

                Is it assessable income under ordinary concept S6-5 ITAA97, Common Law Test (Scott, Dickson, Arther Murry)

                Is it a Capital Gain S102-5 ----- S108

                                What type of CGT Asset

                                CGT Asset (Intro)

                                Triggered CGT Event D    

What if Jenny writes the book herself?

                It will be income as it satisfies the definition of income


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