Question 1

You have a client named Elise Bennett who is a Nurse Practitioner and is an employee of Brisbane Paediatric Clinic. She has come to you to seek advice about which receipts received could potentially be assessable for the 30 June 2019 year.

Whilst working as an employee, Elise received a weekly salary of $1625, an annual uniform allowance of $400 paid to her, and $800 reimbursed by Brisbane Paediatric Clinic (her employer) for the payment she made for annual membership to the Australian Primary Health Care Nurses Association.

During the 2018/19 income year Elise cared for a child named Chuck who suffered from an ongoing illness. Elise in consultation with a leading paediatric doctor was able to successfully diagnose Chuck's illness and prescribe the correct medication allowing him to make a full recovery. Chuck fully recovered within 3 months of taking the medication. Chuck's parents were thankful to Elise for caring for him over the 3 months and sent her a Westfield voucher as a gift. Elise received the $800 voucher to recognise her valued work performance.

Elise was the first Nurse Practitioner that Brisbane Paediatric Clinic had ever employed. Considering her qualifications and expertise in paediatric nursing they were concerned that other paediatric hospitals or clinics in the Brisbane area would be interested in employing Elise. Brisbane Paediatric Clinic thought that it may be possible that Elise could leave the Clinic after developing a reputation with clients and take away their business. As a result, Brisbane Paediatric Clinic asked Elise to sign a contract before commencing her employment on 15^th July 2018. The terms of the contract were that after ceasing her employment with the Clinic, Elise would not practise as a Nurse Practitioner in a 20 kilometre radius of Brisbane Paediatric Clinic for a 3 year period. Although such agreements were not a normal incident of this kind of employment; Elise signed the agreement and was paid $15,000 in respect of the restrictive covenant.

On 3 March 2019, Elise sustained a serious back injury at work. She was unable to work for a substantial period of time. Elise 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) $16,250

Unfortunately for Elise, Workers Compensation did not cover all of the costs related to her rehabilitation. Therefore, Elise entered into a damages claim against Brisbane Paediatric Hospital to recover these costs. Elise and Brisbane Paediatric Hospital reached an agreement during court mediation proceedings. This agreement resulted in Elise being paid a sum of money for her personal injury and suffering on 1June2019. The details of this payment are detailed below;

Court awarded damages resulting from a personal injury claim$8,500

On 31 March 2019, Elise received an unfranked dividend of $3,000 from the Commonwealth Bank. Elise also received $18,700 of rental income from her investment property in Bilinga for the income year ended 30June 2019.

For her birthday in July 2018, Elise was given 10 Instant Scratch It tickets from her friend. She won $120 on one of the tickets.

Required:

Question 1.

Explain to Elise 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. All answers must be supported by reference to the law.

Refer to the flowchart and STEPS

Identify the issue for Elise Bennett

Identify the law

Case law?

Application of law: