Suneeti has been painting for several years. She is employed full-time as a public servant, but works on her art in her spare time - on average 12 to 15 hours a week outside normal work hours. Activities prior to the 2014 income year Suneeti uses a spare room in her home as a painting studio and to store materials. She is a member of a local landscape painting club which regularly arranges painting trips to sites in the area and once a year to the Northern Territory. Her club participation involves attending club meetings once a month and showing her work to gain feedback from the other club members. She engages in her art activity with a great deal of enthusiasm and commitment. Suneeti does not make any concerted efforts to sell her art works. Such sales as she has made have been to family and friends, and then only at prices that just cover the cost of the materials used. In the 2013 income year, Suneeti sold two of her art works to friends for a total of $760 and she spent $4,800 to create several other works of art. Suneeti does not keep receipts for all of her expenses. Activities from the 2014 income year In July 2013, Suneeti began working part-time at her job in the public service so that she could devote more time to her art and make a name for herself as a landscape artist. Suneeti also became a member of two professional arts associations. For the first time, she engaged an agent to assist with the exhibitions she has planned for the 2014 income year and with marketing her work more generally. In consultation with her accountant and her agent, she develops a business plan for the 2014-2016 income year. Suneeti's business plan involves renting of a small studio to conduct her painting and store her materials. In the 2014 income year, she exhibited her works at various local galleries as part of group exhibitions and sold a number of paintings for a total of $10,200. She received very good write-ups in art review magazines. In fact, she won a prize: 'artist of the month' from one of the magazines. The prize was a cash award of $10,000. She keeps detailed records of her income and expenses. Her art expenses for the 2014 income year were $11,200, comprised of the following: Type of expense Amount Materials $2,320 Rent $5,000 Gallery commission (40% of total sales) $3,680 Membership fees in professional arts associations $150 Journal subscription fees $50

2 In the 2014 income year, Suneeti returned a net loss of $1,000 from her art activity (excluding the prize). In the 2015 income year, she had an 'off-exhibition' year to build up a body of work so that she could participate in exhibitions (local and interstate) she has planned for the following year, which meant that no sales were made. She incurred the same expenses for the 2015 income year as she did in the 2014 income year, and therefore returned a loss from the activity. In the 2016 income year she incurs expenses of $12,000 but makes $45,000 selling her art. She is setting up a website of her works for greater exposure. She intends to ultimately resign from her full-time job and spend more time marketing and producing her art, if that is sustainable. Required: Using case law to substantiate your answer, is Suneeti carrying on a business and if so, when did her business commence and what amounts of assessable income did she receive? Source: Income Tax Ruling, Australian Taxation Office