Question 2 (Income)
Which of the following is most likely to constitute ordinary income under s 6-
5 ITAA 97?
- 1) Sale of a commercial office building for $3million by an investor. The investor did not sell any other commercial buildings during the year.
- 2) Payments of $200 per tree received by tree farmers from a logging company for each tree that the logging company wishes to cut down and remove from their farm. The trees are grown for the purpose of sale.
- 3) A lump sum payment received by an inventor, for the outright sale to a large company of the world-wide patent on her latest invention. The inventor will no longer have any rights over the invention.
- 4) A payment received by a professional Soccer player from a Sydney club for agreeing not to sign up nor play for any other club for the next two years. The player decided to return to England and did not play for any Australian clubs.
- 5) A payment from the Federal Government, received by a mining company, in compensation for the cancellation of a right to search for minerals in a particular area. The mining company did not have any other rights at the time.