Hilary is a well-known mountain climber. The Daily Terror
newspaper offers her $10,000 for her life story, if she will write it.
Without the assistance of a ghost writer, she writes a story and
assigns all her right, title and interest in the copyright for $10,000
to the Daily Terror. The story is published and she is paid. She has
never written a story before. She also sells the manuscript to the
Mitchell Library for $5,000 and several photographs that she took
while mountain climbing for which she receives $2,000.
Requirement:
Discuss whether or not the three payments are income from
personal exertion. Would your answer differ if she wrote the
story for her own satisfaction and only decided to sell it later?
Question 2 (5 marks)
Your client is a parent who lent $40,000 to her son to provide a
short-term housing loan. The agreement is that the son will repay
$50,000 at the end of five years.
Reconsider this question in light of the following facts. The loan was
made to the son without any formal agreement and without any
security provided for the sum lent. In addition, the client (the
mother) has informed you that she told her son that he need not
pay interest. However, the son repaid the full amount after two
years and included in his payment an additional amount which was
equal to 5% pa on the amount borrowed. Only one cheque was
presented for the total amount.
Requirement:
Discuss the effect on the assessable income of the parent.

Read less