Mark is an Australian resident who is in the business of manufacturing computers. Mark also owns one rental property in Manly, Sydney. He purchased the property in March 2021. The current tenant in the Manly property entered a five-year lease with Mark on 1 September 2021 at an annual rent of $50,000. In late 2021, Mark needed to raise some money quickly in order to finance the expansion of his manufacturing operations and he did not want to do by using debt finance or equity finance. Therefore, on 1 December 2021, Mark decided to assign to FinCo Pty Ltd (an unrelated party) his right to receive rental income from the Manly property for the next three years in return for an immediate lump sum payment of $130,000 (which was the present value of three years of rental income at an agreed discount rate). Mark has never entered into such a transaction before and only contemplated it in light of his need to raise finance in late 2021.

Which of the following is MOST correct?

a.

The amount is not income but capital, as Mark is not carrying on a business and it is a one-off payment.

b.

The $130,000 that Mark received on 1 December 2021 is income according to ordinary concepts because the transaction made a profit. It is therefore included in assessable income under s 6-5.

c.

The $130,000 that Mark received on 1 December 2021 is income according to ordinary concepts based on the first strand of the High Court's reasoning in _FCT v The Myer Emporium Ltd_ 87 ATC 4363.

d.

The $130,000 that Mark received on 1 December 2021 is income according to ordinary concepts based on the second strand of the High Court's reasoning in _FCT v The Myer Emporium Ltd_ 87 ATC 4363.

e.

Mark is carrying on a business. Renting the Manly property is part of the ordinary course of Mark's business operations and therefore the $130,000 is income according to ordinary concepts pursuant to s 6-5.