RevisionQuestionTwo

Robert and Rose Mathieson are the joint owners of a business called KakuduHoliday Cabins (KHC). The business is located in the Kakudu National Park in theNorthern Territory (Kakudu NP). KHC hires out fully catered luxury cabins to thegeneral public during the Northern Territory dry season. KHC also conductsbirdwatchingtours intheKakaduNP.

Thefollowingprovidesadditionalinformationabouttheparties:

1. For the period 1 May 2018 to 30 November 2018, KHC derived $500,000 inaccommodationfeesand $200,000for restaurantrevenue.TheoperationofKHC's birdwatching tours is subcontracted to another company, BirdWatchTours(BirdWatch).
2. Assume Robert is an Australian resident and Rose is a non-resident ofAustralia.
3. Rose is the songwriter for a number of wellknown rock bands, including theAustralianrockbandJKLM.

AgreementwithBirdWatch

The agreement between KHC and BirdWatch is due to end on 31 December 2022.Recently, complaints from customers have been received by KHC in relation to thequality of the tours provided by BirdWatch. The Department of Parks and Wildlifecarried out an investigation of BirdWatch. As a result of the investigation, theDepartment of Parks and Wildlife suspended BirdWatch's tour operator's licencewhich meant BirdWatch stopped providing birdwatching tours. As a result, KHCterminated the contract with BirdWatch and launched legal action for loss ofrevenuesustainedfromthestoppageofthe birdwatchingtours.KHC's claimwas

settled for $400,000 on 21 November 2019 and they found another birdwatchingtour operatorthreemonths later andrestartedprovidingbirdwatchingtours.

AgreementwithRobert'sBrother

Robert's brother Greg is 22 years old and decided to take one year off afterfinishing his accounting degree at Canberra University. Greg establishes acrocodile hunting business providing services to a number of businesses involvedin the tourism industry in the Kakudu NP ("Services"), including KHC. As paymentfor providing the Services to KHC, Greg is allowed to use one of its cabins for sixmonths,valuedat$40,000.

RoyaltyReceipts

Rose receives royalties of $3,000 per month relating to the use of her songs inAustralia. As Rose lives overseas, each year, she often asks Robert's friendMichelle to pay $34,000 as a lump sum to Rose and in return, Rose will assign therights to the royalty payments from the publisher to Michelle. Michelle agreed to thisarrangementon1July 2018, andRosetoldMichelletomakethepayment of

$34,000toherhusbandRobert.

Required

Using relevant legislation to explain your answer, explain to Robert Mathieson, RoseMathiesonand Greg Mathiesonas to whether the above transactions constitutesassessableincome.