Zacky Johnson, aged 59, is a certified forensic accountant who works at home and earns fees for his personal services.

On 1 July 2020, Zacky decides to operate his business through a discretionary trust* Johnson Forensic Accounting* (JFA). Under his arrangement, Zacky continues to work from his home in office study.

For all of the 2021 income year, JFA employs his son Jeremy as an administrative assistant on a part-time basis. Jeremy is responsible for managing Johnsons calendar and making bookings with clients.

For the 2021 income year JFA earned a total of $350,000 client fees, 75% was received from one main client Harrison Pty Ltd, with whom JFA continued to engage on an ongoing basis and which Zacky had done in the past. The rest of the fees were generated from several minor jobs from unrelated clients.

By 15 June 2021, JFA had invoiced all its clients. However by 30 June 2021, JFA had only received $300,000 with the remaining $50,000 only being received on the 15 July 2021. JFA never advertised any of Zacky Johnsons services and does not have a business website.

Required

Part 1

Considering the fats described above, advise JFA on the assessability of the values above for the year ending 30 June 2021, applying PSI legislation and any related rulings

(Hints: Outline the 5 different tests under S 887-15 (1) ITAA97 to determine whether PSE is carrying on a PSB

Use the following structure state and test requirements and whether the tests have been met

1. Introduction

Discussion-Outline the 5 different tests underS87-15(1) ITAA97 to determine whether the PSE is carrying on a PSB

2. Results tests

3. 80% test

4. Unrelated clients test

5. Employment test

6. Separate Business Premises test

7. Conclusion

Part 2

Based on your conclusion, how will the income be treated for tax purposes?