You have a client named Jane Bennett who is a Nurse Practitioner and is an employee of Brisbane Paediatric Clinic. She has come to you to seek advice about which receipts received could potentially be assessable for the 30 June 2019 year.

Whilst working as an employee, Jane received a weekly salary of $1625, an annual uniform allowance of $400 paid to her, and $800 reimbursed by Brisbane Paediatric Clinic (her employer) for the payment she made for annual membership to the Australian Primary Health Care Nurses Association.

During the 2018/19 income year Jane cared for a child named Fred who suffered from an ongoing illness. Jane in consultation with a leading paediatric doctor was able to successfully diagnose Freds illness and prescribe the correct medication allowing him to make a full recovery. Fred fully recovered within 3 months of taking the medication. Freds parents were thankful to Jane for caring for him over the 3 months and sent her a Westfield voucher as a gift. Jane received the $300 voucher to recognise her valued work performance.

Jane was the first Nurse Practitioner that Brisbane Paediatric Clinic had ever employed. Considering her qualifications and expertise in paediatric nursing they were concerned that other paediatric hospitals or clinics in the Brisbane area would be interested in employing Jane. Brisbane Paediatric Clinic thought that it may be possible that Jane could leave the Clinic after developing a reputation with clients and take away their business. As a result, Brisbane Paediatric Clinic asked Jane to sign a contract before commencing her employment on 15^th July 2018. The terms of the contract were that after ceasing her employment with the Clinic, Jane would not practise as a Nurse Practitioner in a 20 kilometre radius of Brisbane Paediatric Clinic for a 3 year period. Although such agreements were not a normal incident of this kind of employment; Jane signed the agreement and was paid $15,000 in respect of the restrictive covenant.

On 3 March 2019, Jane sustained a serious back injury at work. She was unable to work for a substantial period of time. Jane claimed workers compensation for a ten-week period from the time that the injury occurred. The Workers compensation details are as follows;

• Workers compensation payments to replace lost income (for 10 weeks) $16,250

Unfortunately for Jane, Workers Compensation did not cover all of the costs related to her rehabilitation. Therefore, Jane entered into a damages claim against Brisbane Paediatric Hospital to recover these costs. Jane and Brisbane Paediatric Hospital reached an agreement during court mediation proceedings. This agreement resulted in Jane being paid a sum of money for her personal injury and suffering on 1 June 2019. The details of this payment are detailed below;

• Court awarded damages resulting from a personal injury claim $8,500

On 31 March 2019, Jane received an unfranked dividend of $3,000 from the Commonwealth Bank. Jane also received $18,700 of rental income from her investment property in Bilinga for the income year ended 30 June 2019.

For her birthday in July 2018, Jane was given 10 Instant Scratch It tickets from her friend. She won $120 on one of the tickets.

Required:

Explain to Jane in your professional opinion as to whether each of the receipts mentioned above constitute income under s6-5 of the ITAA97. There is no need to consider the source of the income or when it was derived, just discuss whether the receipts are ordinary income or not. Ensure that you apply the relevant law to the facts.

Student may find using the table useful in answering the question.

Note to Students: The format of your answer should follow the steps outlined in your Study Guide (the steps are amalgamated below). Your answer should apply the primary sources of law discussed in the lecture about Study Guide Chapter Two Assessable Income. That is, ensure you refer to legislative references and case law where applicable.

Weve started your solution for you. See the steps below that you should follow. You will find some guidance in the format, however you will need to complete a substantial amount of the application yourself.

IDENTIFYING WHETHER A RECEIPT WILL BE ASSESSABLE UNDER s 6-5 ITAA97:

Step 1: Is there a legislative definition of ordinary income under the ITAA?

Step 2: Is there case law that defines ordinary income?

Consider the common law characteristics of ordinary income have these

been met on the balance?

Does the receipt fit into any of the known categories of ordinary income:

Step 2(a): Are any of the receipts income from personal exertion?

Step 2(b): Are any of the receipts income from property?

Step 2(c): Are any of the receipts income from business?

Step 3: Are any of the receipts exempt or non-assessable non-exempt income?

Step 4: Are any of the receipts a kind of statutory income? The statutory provision usually prevails.

Any receipts that do not fit into the any of the above categories will not be a kind of assessable income.

Receipt #	Is it income from personal exertion? s 6(1) ITAA 1936	Is it Income from property?	Is it Income from business	Is it exempt or Non-assessable (NANE)?	Is it statutory income (usually prevails)?	Overall is it ordinary income?
Why is it important to know if something is ordinary income?
Salary $1625
$300 Westfield Voucher
Uniform Allowance $400
Reimbursement professional membership $800
Restrictive covenant payment $15,000
Workers Compensation to Replace Income $16,250
Damages for personal injury and suffering $8,500
Dividend income $3,000 (unfranked)
Rental Income $18,700
Instant Scratch It win $120