In July 2010, Jack Brabman opens a car-yard specializing in high-end cars manufactured in Germany, France and Italy. He obtains the exclusive distribution rights for the following European cars: the Alpha, the Beta, the Gamma and the Delta. This means that Jack's car yard is the only car-yard in Australia selling these cars.

For each of the past five years, Jack receives the following annual revertue of $1million from the car yard, based on the make of car sold:

Alpha- $150,000

Beta - $650,000

Gamma - $175,000

Delta - $25,000

On 1 December 2020, Beta announces that they are terminating the exclusive distribution agreement that Beta has with Jack for the distribution of the Beta car. Beta pays Jack the amount of $5million dollars to compensate him for the termination. Jack still has the rights to sell the Alpha, Gamma and Delta cars in Australia. However, the loss of the right to sell the Beta cars has made him question whether his car sales business is viable and is considering shutting the business down.

Jack decides to get away from it all and travels from his home in Melbourne to his farm in the Southern Highlands. When Jack bought the farm in 2017 he thought he would use it as a hobby fam and use it to breed Black Angus cattle. The farm comprised 5 ha of land, a house and outbuildings near the resort town of Bowral. Jack paid $2million dollars when he purchased the property in 2017.

Jack's friend Luigi came to visit. Luigi suggested to Jack that he subdivide the land on his farm into two 2.5ha blocks (Block A and Block B). The cost of this subdivision was $100,000. Luigi suggested that Block A should be further subdivided into 50 smaller blocks with roads, utilities and other infrastructure. A house would be built on each of the smaller blocks and then sold to the general public. Luigi estimated that the cost of the subdivision and the property development would be $25million dollars and that the houses on the smaller blocks could be sold for $1million dollars each.

Luigi also suggested that Block B be sold to the farmer with a property next to Jack's for $10million dollars.

Jack implemented Luigi's suggestions. The value of Block A at the time the subdivision and property development commenced was $8million dollars. Block B was also worth $8million dollars at that time. Jack received $50million dollars for selling the houses on Block A and $10milllion from selling Block B.

Jack received a distribution of $15,000 from the JB Family Trust on 15 January 2023.

Required:

Using relevant legislation and case law, explain to Jack whether the gains from the following transactions are assessable income under the income tax law:

1. the sale of the cars;

2. compensation paid by Beta for terminating the contract;

3. sale of the homes built on the smaller blocks on Block A;

4. sale of Block B;

5. receipt of the distribution from the JB Family Trust