MLC301 Principles of Income Tax Law - Assessment Questions

QUESTION 2. 18

Consider the following situations and discuss whether they are income in ordinary concepts or statutory income. Note: Where no dates are given, the previous tax year is to be assumed.
(a) A sales representative has received the following amounts:
• Wages $45 000
• Allowances for entertaining clients 8 000
• Reimbursement of telephone expenses 800
(b) The following sums received by an employee who has retired from his employment:
• pro-rata share of the company’s Christmas bonus received two weeks after his resignation
• a special bonus paid in recognition of a long and meritorious service received two weeks after resignation; this was accompanied by a note from management expressing their gratitude