Question 8 (4 points) Required: Briefly explain the tax that the superannuation fund would pay on the contributions and earnings. For this particular question there is no need to cite authority (4 marks). Mei in 38 and works as an accountant, and is entitled to an annual remuneration of a $100,000 salary. She has the following amounts contributed to her superannuation account for the tax year: $10,500 of mandatory employer contributions; $5,000 also contributed by her employer, due to an effective salary sacrifice arrangement that Mei entered with her employer; $8,000 which Mei contributed to her superannuation account out of her own money. After making this contribution, she immediately gave notice to the superannuation fund (its trustee) that she intended claiming a tax deduction on this amount; and $10,000 which Mei contributed to her superannuation account out of her own money. For this amount, she did not give notice to the superannuation fund that she intended to claim a tax deduction on it. The superannuation fund uses the money deposited into Mei's account to invests in bank deposits and real estate. It earns $5,000 in rent and $2,000 in interest income.

Question 9 (4 points) Required: Briefly explain whether these amounts ($12,000, and the annuity receipts) are assessable income (citing authority where appropriate) (4 marks). Cassie owns a farm with a large lake on it. The lake contains some rare minerals sought after by cosmetic companies. One particular cosmetic company pays Cassie $20,000 in exchange for Cassie agreeing to allow the company to filter the lake water, so as to extract the rare mineral from it. Under the terms of the contract, the company is entitled to extract up to 10 kg of this mineral. If less than 10 kg is extracted than the $20,000 is to be reduced on a pro-rata basis. As only 6 kg of minerals are extracted, Cassie ends up being paid $12,000. Cassie invests this $12,000 in a 3 year annuity, where she receives $4500 per annum (with no return of capital at the end of the annuity).

Question 10 (4 points) Required: Briefly explain whether the $400,000 and/or $20,000 receipts constitute ordinary income (citing authority where appropriate) (4 marks). Mike, who is 67 years of age, is employed as a judge, and his terms of employment includes guaranteed employment till he is 70 years of age. A major law firm (Law Partners) approaches him and as an incentive offers him a $400,000 lump-sum (on top of an annual salary of $500,000) to resign from his role as a judge and work for them. The contract states that the $400,000 is for giving up the right to guaranteed employment as a judge. Mike accepts the offer. After commencing employment, Law Partners gives Mike an additional $20,000 for him to agree to not provide services to a competing law firm for the duration that he is employed by Law Partners.