INCOME FROM PROPERTY

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Sadiq, K. et al., 2019. Principles of taxation law 2019, Thomson Reuters (Professional) Australia Ltd.QuestionsCHAPTER 9 – INCOME FROM PROPERTYQuestion 9.1Your client has invested $10,000 in a savings bond that matures in five years’ time and pays interestat 8% pa, but the interest is paid as a lump sum on the redemption of the bond in five years’ time.How will the interest be treated for income tax purposes?Question 9.2Your client has purchased an investment apartment that has a rent guarantee from the developer of5% pa for a period of four years. During the current financial year your client has been unable to rentthe apartment, so she is relying on the rent guarantee payment to compensate her for not beingable to find a tenant. The developer is due to pay the amount as a lump sum and your client is notsure whether the amount is income. Advise her.Question 9.3Your client was injured in a work‐related accident and has received damages of $300,000 for the lossof his ability to work. In the final judgment the Court awarded $12,000 in pre‐judgment interest and$5,000 in post‐judgment interest. Which amounts, if any, are assessable income?Question 9.4Your client makes most of her income from writing hit songs for various performing artists andreceives a large amount of royalties from overseas record companies. Is this assessable income andhow will it be taxed?Question 9.5Your client has just written his first book of his experience as a hostage of a terrorist group. He spentthe last two years writing the book and he has received two offers from a publishing company thatwished to publish his book. The first offer is to purchase the copyright for a lump‐sum payment of$10,000 provided your client gives up future claims to the copyright and royalties. The second offeris to pay 10% of the sale price of each book sold provided your client agrees to assign the copyrightin the book to the publisher for 10 years.Question 9.6Your client is a parent who lent $40,000 to her son to provide a short‐term housing loan. Theagreement 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 anyformal agreement and without any security provided for the sum lent. In addition, the client (themother) has informed you that she told her son that he need not pay interest. However, the sonrepaid the full amount after two years and included in his payment an additional amount which wasequal to 5% pa on the amount borrowed. Only one cheque was presented for the total amount.Discuss the effect on the assessable income of the parent.

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