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Jim, Kit and Erik are out and about having fun in Melbourne. They stop by a café and Jim goes to
the counter to buy some drinks. He finds some fancy bottles of soft drink he hasn’t seen before.
He buys three. The friends are having a lively conversation as they drink their drinks. All of a
sudden Kit starts coughing and spluttering. He then goes purple in the face. He is clearly choking.
Erik, a trainee nurse, grabs Kit around the middle and pushes his clenched fist just under Kit’s
chest. Kit coughs up a small plastic ball. This was part of the bottle top and has come loose. Kit
starts crying and is comforted by Jim. Kit is very distressed as he realises what might have
happened if Erik had not been there and had not had the necessary training. Kit has since been
diagnosed with clinical depression and has not been yet been able to resume his University
studies.
Required: Does Kit have an arguable case in tort law? Who would he sue? On what
grounds?
Strawberry Corporation bought 200 tones of strawberries from ABC Company under a contract. The contract was stating that the strawberries are to be delivered in 5 different containers at 40tones each. After each delivery, Strawberry Corporation was to pay 20% of the price. ABC Company delivered the items as agreed, but Strawberry Corporation failed to pay the last installment of 20% of the price. After repeated reminders for payment, the owner of ABC Company started a media campaign against Strawberry Corporation and destroyed their reputation in the market. As a result, Strawberry Corporation lost part of their clients. Advise Strawberry Corporation and ABC Company. What are the available legal options for them?
Two years ago Peta purchased a house in Kew. This house had two old tennis courts down the back which were in poor condition. She purchased the property for two reasons:
? so that she and her family could live in the house; and
? so that she could build three units on the tennis courts and sell them at a profit.
In the current tax year the tennis club next door offered to buy the old tennis courts, but only if Peta first restored them to good condition. Peta decided to accept the club�s offer instead of going ahead with her plan to build and sell units.
Peta spent $100,000 on preparing the tennis courts for sale. This involved a great deal of work. Peta had to resurface the tennis courts and build new fences around them. She then sold the tennis courts in the current tax year to the tennis club for $600,000.
Ignoring capital gains tax, discuss whether the receipt of $600,000 is ordinary income under s 6-5.
Scott is an accountant who purchased a vacant block of land in
Brisbane on 1 October 1980. On 1 September 1986, Scott built a
house on the land. At the time, the land was valued at $90,000 and
the cost of construction was $60,000. The property has been rented
out since construction was completed. On 1 March of the current tax
year, Scott sold the property at auction for $800,000.
Requirement:
a) Based on the information above, determine Scott’s net
capital gain or net capital loss for the year ended
30 June of the current tax year.
b) How would your answer to (a) differ if Scott sold the
property to his daughter for $200,000?
c) How would your answer to (a) differ if the owner of the
property was a company instead of an individual?
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.
Scott is an accountant who purchased a vacant block of land in
Brisbane on 1 October 1980. On 1 September 1986, Scott built a
house on the land. At the time, the land was valued at $90,000 and
the cost of construction was $60,000. The property has been rented
out since construction was completed. On 1 March of the current tax
year, Scott sold the property at auction for $800,000.
Requirement:
a) Based on the information above, determine Scott’s net
capital gain or net capital loss for the year ended
30 June of the current tax year.
b) How would your answer to (a) differ if Scott sold the
property to his daughter for $200,000?
c) How would your answer to (a) differ if the owner of the
property was a company instead of an individual?
The Daily Terror newspaper offers her $10,000 for her life story, if she will write it, and she writes a story and assigns all her right, title and interest in the copyright for $10,000 to the Daily Terror. She also sells the manuscript to the Mitchell Library for $5,000 and several photographs for $2,000.
Answer:
These three payments are income from personal exertion, because the book was written personally and the rights, manuscript and photos were sold in accordance with the law. If she wrote the story for her own satisfaction and only decided to sell it later, the situation will be the same.
Scott is an accountant who purchased a vacant block of land in
Brisbane on 1 October 1980. On 1 September 1986, Scott built a
house on the land. At the time, the land was valued at $90,000 and
the cost of construction was $60,000. The property has been rented
out since construction was completed. On 1 March of the current tax
year, Scott sold the property at auction for $800,000.
Requirement:
a) Based on the information above, determine Scott’s net
capital gain or net capital loss for the year ended
30 June of the current tax year.
b) How would your answer to (a) differ if Scott sold the
property to his daughter for $200,000?
c) How would your answer to (a) differ if the owner of the
property was a company instead of an individual?
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 paren
Scott is an accountant who purchased a vacant block of land in
Brisbane on 1 October 1980. On 1 September 1986, Scott built a
house on the land. At the time, the land was valued at $90,000 and
the cost of construction was $60,000. The property has been rented
out since construction was completed. On 1 March of the current tax
year, Scott sold the property at auction for $800,000.

Based on the information above, determine Scott’s net
capital gain or net capital loss for the year ended
30 June of the current tax year.
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