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2. Defence Pty Ltd manufactures toy guns. Defence enters into a contract with Silla Pty Ltd (Silla) for Silla to supply Defence with various parts
2. Defence Pty Ltd manufactures toy guns. Defence enters into a contract with Silla Pty Ltd (Silla) for Silla to supply Defence with various parts to use in manufacturing the toy guns. Several months later, due to community lobbying against the use of toy-guns, Silla rescinded the contract and paid $80,000 to Defence to avoid any legal issues. Cancellation of the contract did not affect Defence's business operating structure as Defence has numerous other different business activities a. Does the $80,000 received from Silla form part of Defence's ordinary business income? Justify your answer with reference to appropriate case law and legislation. b. Would your answer differ if Defence could not operate without the parts supplied by Silla and if so, how
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