Rick Hastie is a senior executive in the Canberra office of a large company called DxP Ltd (DxP). Rick needs to do his income tax return for the 2021 income year and he has come to you for advice.

He provides the following information about his income and expenditure.

He receives $500,000 per annum in salary from the DxP. In addition to his salary, Rick received an annual performance bonus of $100,000 on 15 June 2021 as he satisfied certain billing targets. Rick's investment portfolio comprises of the following:

Asset	Acquisition Date	Acquisition Price	Notes
Queanbeyan property	24 June 2015	$600,000	Property is a vacant warehouse site.
Shares in BHP	3 March 2018	$50,000	Shares pay dividends

Before Rick joined DxP, he worked for a large mining company GlenRio. DxP had to entice him away from the mining company by offering him a payment of $250,000 if he agreed to work for DxP. Rick gladly signed the employment contract with DxP and received the payment on 3 December 2020.

Rick loved working with his hands and had dreams of becoming a famous furniture maker. He makes the furniture using timbers such as oak and hardwood. Rick set up a studio in the garage of his home. In mid-2018, he bought wood-working equipment and timber from the local merchant. Rick worked in his studio most weekends. At first, he made furniture just for his friends when they asked him. He also sold his furniture occasionally at the local market on Saturday mornings. He charged prices for his furniture that only covered the cost of the materials. He paid for everything using cash and threw the receipts into an old oil tin.

The owner of a stylish furniture store in Manuka, Mick, contacted him after seeing Rick's furniture at a friend's house. Rick agreed to let Mick show his furniture in his store. Once Rick's furniture went on display in Mick's store in early July 2019, Rick's phone rang off the hook. People were keen to have an item of Rick's furniture on display in their home.

He employed an accountant to keep his books of account and develop plans to grow the revenue from his furniture-making. The accountant told him to set up a website so people could read about Rick and his furniture. Rick was very busy and employed two carpentry apprentices to help him with the furniture. Very soon Rick was supplying his furniture to boutique furniture stores around the country and also sold his furniture online through his website. In the 2020 income year, Rick earned

120,000 from the furniture-making activity, and $275,000 in the 2021 income year.

Rick wanted to move his studio to somewhere bigger so that he could make more furniture. He decided to renovate a vacant warehouse site that he owned in Queanbeyan. He bought the property back in 2015 as a friend told him that the Queanbeyan area, being close to Canberra, was becoming popular and the land would increase in value in the next 10 years. Rick engaged an architect to help him renovate the warehouse site. The architect advised Rick to find another place for his studio and turn the vacant warehouse site in Queanbeyan into 10 courtyard homes and sell them. Rick thought this was a good idea. Rick built the courtyard homes using a builder who charged him $4.5million to do the construction. The value of the vacant warehouse site at the time the construction commenced was $1.1million. He sold the 10 courtyard homes in January 2021 for $7.5million.

Rick has a small investment portfolio comprised of BHP shares. Rick received fully franked dividends of $4,000 in the 2021 income year.

Required:

Explain to Rick Hastie how the gains in the above-mentioned transactions would or would not constitute assessable income under the income tax legislation Use relevant legislation and case law to support your answer.

no need to consider the residence and source issues. Include calculations if required. consider all that an amount is a capital receipt assume it is not assessable income for the purposes of this question (there is no need to calculate the capital gain).