Scope Ltd is an Australian company carrying on a diversified merchandising and financial business including an agency arrangement with an English shipping company which was effective from 1 March 1985. This agency was entered into by an agreement which was to operate for 40 years. As a result of a reorganisation of the affairs of the English shipping company, the agency was terminated in March 2019 after it had operated for 34 years. The Australian company calculated the profits which it had expected to earn from the agency during the subsequent three years, and negotiated a cancellation of the agreement in consideration of the payment by the shipping company of an amount which was in the vicinity of the calculated amount. The Australian companys calculations were not disclosed to the English company, who accepted the figure calculated and paid that sum. The shipping agency was a major part of the Australian companys business (contributing one-third of its profits) and, when it was cancelled, other minor activities relating to shipping were also terminated.

(1) Advise Scope of the income tax consequences of the above arrangements.

(2) What difference would it make if the agreement had been entered into on 1 July 1992?