Question 1

Suzy and Mark Smith are married and residents of Australia for income tax purposes.Suzy is a stay- at-home mum. Her main source of income is her share of the profits from a rental property that she and Mark own as joint tenants. Suzy and Mark have a written agreement prepared by their solicitor which states that they will share any rental profit or rental loss as follows: Suzy, 70% and Mark 30%. During the 2016-2017 income year, the rental property returned a total profit or net rental income of $20,000.

During the 2016-2017 income year, Suzy also received a years free supplies of health foods worth $6,000 after winning a Dieter of the Year competition. The competition was run by a womens magazine. Dieters who lost at least 20 kilograms in six months were eligible to enter the competition and go into the draw. Suzy also received $2,000 in cash from the womens magazine for the time she spent being interviewed three times so that the womens magazine could write a feature article about her life as the winner of the competition.

YOU ARE REQUIRED TO: a. Discuss which amount, if any, will be included in Suzys assessable income for the 2016-2017 income year from the rental property and from the womens magazine. Your answer should reference relevant sections of the Income Tax Assessment Acts and relevant case law. You may assume that the pre-requisites of ordinary income have been met, if applicable.

b. Determine the dollar amount, if any, that will be included in Marks assessable income for the 2016-2017 income year from the rental property.