During 2013 Clara started working as a senior tax manager with an office supply
retailing chain. During the initial job interview process it was made clear that this
would be a role predominantly dealing with income tax matters.
• During February 2015 Clara was told that her role would change to one that
deals predominantly with GST. However, her job title was to remain
unchanged. When Clara complained that this was not the job that she had
applied for, she was told that she would receive $25,000 compensation over 4
equal instalments to compensate her for the change of position.
• Since 2014 Clara has also been running her own private business on
weekends completing tax returns for members of the public. Her employer
believed that this had the potential to cause Clara to be mentally tired and
perform her employee role in a suboptimal manner. As a result, Clara and her
employer agree for Clara to be paid $15,000 in exchange for her agreeing to
cease her business for the next 5 years.
Ignoring Capital Gains Tax, discuss whether:
a) The receipt of the $25,000 constitutes assessable income.
b) The receipt of $15,000 constitutes ordinary income.

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