Question 1

You have a client called Jillian and she is a landscape gardener and is an employee of Greenthumb Landscapers Pty Ltd. She has come to you to seek advice about which receipts that she has received could be potentially assessable for the 30 June 2020 year.

Whilst working as an employee, Jillian has received a weekly salary of $900, had an annual car allowance of $1,800 paid to her, and $210 of professional membership to the Landscaping Society reimbursed by Greenthumb Landscapes (her employer).

Greenthumb Landscapers Pty Ltd is always concerned that employees may leave the company after developing a reputation with clients and take away their business. So when Jillian commenced with the company on 31 August 2019, she was required to sign a contract with Greenthumb Landscapers agreeing that she would not commence a business of the same nature as Greenthumb Landscapers within the Brisbane, Logan and Gold Coast metropolitan areas for a period of 5 years following any termination of her employment. Although such agreements were not a normal incident of this kind of employment; Jillian signed the agreement, and was paid $15,000 in respect of the restrictive covenant. Note that Jillian had been considering starting her own landscaping business in the Brisbane area, had she not been able to obtain work as an employee.

During the 2019/20 income year Jillian completed a big landscaping job for Bunnings Warehouse Ltd, a customer of Greenthumb Landscapers Pty Ltd. Bunnings Warehouse was particularly pleased with the work that Jillian had done; so on the completion of her work for them, Bunnings Warehouse sent Jillian a gift of a $250 Myer voucher to thank her for her valued work performance.

On 3 March 2020, Jillian sustained a serious injury at work. She was unable to work for a substantial period of time. Jillian claimed workers compensation for a ten week period from the time that the injury occurred. The Workers compensation details are as follows;

Workers' compensation payments to replace lost income (for 10 weeks)$9,000

Unfortunately for Jillian, Workers Compensation did not cover all of the costs related to her rehabilitation. Therefore Jillian entered into a damages claim against Greenthumb Landscapes to recover these costs. Jillian and Greenthumb Landscapes reached an agreement during court mediation proceedings. This agreement results in Jillian being paid a sum of money for her personal injury and suffering on 1June2020. The details of this payment are detailed below;

Court awarded damages resulting from a personal injury claim$12,000

On 31 March 2020 Jillian received an unfranked dividend of $2,000 from iinet Ltd. Jillian also received $18,000 of rental income from her investment property in Coorparoo for the income year ended 30June 2020.

Before commencing her job, much to her surprise Jillian won $75 gambling on poker machines at the Casino in July 2019.

Required:

Explain to Jillian in your professional opinion as to whether each of the receipts mentioned above constitute income under s6 5 of the ITAA97.There is no need to consider the source of the income or when it was derived, just discuss whether the receipts are ordinary income or not. Ensure that you apply the relevant law to the facts.

Student may find using the table useful in answering the question.