Jin visits her god-parents farm - citrus fruits and grapes. There has been a collapse in the market price in relation to blood oranges and there are no pickers. She laments the waste and her god-parents tell her to pick what she likes the fruit has no value now and will only fall to the ground. Jin picks 10 bags of fruit and returns home to make her grandmas recipe of blood orange marmalade - all she had to do was buy some new jars and sugar. At breakfast, her housemate exclaims You should go into business and sell that sensational marmalade! Jin thought why not and rents a temporary stall at the farmers markets and with free tastings Jin is amazed that she sells all her jam on the same day and makes $500. Jin uses the money to reduce her HECS, but is too busy with Swotvac and the exams to do more. She pondered that she might just be able to make a second batch in time before the end of the fruit season.

Required

Is Jin carrying on a business? Refer to the 8 factors established from Fergusons case to make your decision. Hints: Set out your answer as follows:

Introduction - Identify and advise the relevant tax ruling which outlines the 8 factors

(1 Mark)

Discussion - Address the 8 factors use the following table to discuss whether the factors point to a business or not (8 Marks)

Conclusion Weigh up the factors, and decide on balance, whether Jin is carrying on a business (1 Mark)

FACTORS REASONS FOR REASONS AGAINST

carrying on business carrying on business carrying on business

Part 2.

What 3 considerations/issues/factors do you see impact upon a hobby transitioning to a business? In your view, what are the most important changes when a taxpayer changes from enjoying a hobby activity to carrying on a business. (3 marks)

Part 3.

An SBE by definition is carrying on a business. Outline 2 SBE concessions referred to in this course. (make sure you refer to the law and state what the concession provides) (2 marks)