In July 2010, Jack Brabman decides to open a car-yard specializing in high-end carsmanufactured in Germany, France and Italy.He obtains the exclusive distribution rights forthe following European cars: the Alpha, the Beta, the Gamma and the Delta.This meansthatJackisthe onlycar-yardin Australia sellingthese cars.

For each of the past five years, Jack receives the following annual revenue of $1million fromthecaryard,basedonthe makeofcarsold:

• Alpha- $250,000
• Beta-$350,000
• Gamma-$175,000
• Delta-$225,000

In June 2017, 2018 and 2019, Jack received a special award from Alpha for achieving thehighest sales in that year.He received a gold cup worth $60,000 that was in the shape of anAlpha car that he proudly displays in the car yard office.The gold cup is owned by the Alphafamily inItalyso heisnotabletosellthecup.

On 1 December 2020, Gamma announces that they are terminating the exclusivedistribution agreement that Gamma has with Jack for the distribution of the Gamma car.Gamma pays Jack the amount of $2million dollars to compensate him for the termination.Gamma also tells Jack that they are giving the exclusive Australian distribution right to sellthe Gamma car to Luigi, Jack's competitor.Jack still has the rights to sell the Alpha, BetaandDelta carsinAustralia.

One night in early January 2021, Jack's showroom catches fire, and is completely destroyed.Jack purchased the property in 2010 for $500,000.No cars are damaged in the fire.On 5February2021,hereceives $1.5mincompensationforthelossofthebuilding.

Jack decides that the time is ripe to leave the car business.In May 2021, he enters into anagreement with Luigi, allowing Luigi to use Jack's exclusive distribution rights for the Alpha,Beta and Delta cars for five years, in return for an annual payment of 10% of the price of thecarsthatLuigi sellsin hiscar-yardin eachyear.

Required:

Using relevant legislation and case law, explain to Jack whether any of the abovetransactionsconstituteordinary incomeundersection6-5oftheITAA1997.