Taxation Law: Personal Service Income and Capital Gains Assets

Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID

1TAXATION LAW
Answer to question 1:
The case study opens up with the situation that the Hilary was regarded as the well-
known mountain climber and on being approached by the Newspaper company Hilary agreed
to narrate the story of the life. Hilary agreed to assign the interest and title in the story that
would be narrated by in exchange of $10,000. Personal exertion denotes those incomes that
arise from salaries, wages or any business or partnership (Markle 2016). It is worth
mentioning that an individual who is earning income from the private effort then those
incomes are is viewed within the ordinary meaning. The judgment in “FCT v Scott” provided
an explanation that the ordinary income refers to the income that a person earns through the
ordinary concepts (De Simone 2016).
As per “section 15-2 of the ITAA 1997” an individual taxpayer’s assessable income
consists of the value that is linked with the fees, benefits or any services performed would be
considered as assessable income. A person that derives the earnings on the basis of the
private exertion than under the “S-6-1 of the ITAA 1997” it is should be treated in the form
of ordinary income (Williams et al. 2014).
It is found that Hilary obtained the payment from the agreement of writing the book
and assigning the title to the newspaper company. Referring to “S-6-5 of the ITAA 1997”
money from the newspaper interview relating to award for personal service is chargeable
under ordinary concepts (Bach and Wittenberg 2016). Highlighting the event of FC of T v
Brent (1971) the money which was received was the income since it was obtained through
the ordinary meaning.
The case study of Hilary provides that she received a sum of $10,000 and hence it
would be considered as reward for service (Dahl and Lochner 2017). Quoting the event of
“Federal Commissioner of Taxation v Brent (1971)” the amount would be considered as

2TAXATION LAW
income from personal exertion based on the ordinary concepts of “section 6-5 of the ITAA
1997”.
Additionally, she sold the manuscript and the photographs to the Mitchel Library for a
sum of $5000 and $2000 respectively. The sale of photo and the manuscripts that was made
to the library is viewed as income. The case reference of “Marshal v Housden (1958)” can be
made in the present situation to state that the money that was received from such selling is an
income (Hua 2015). This income is chargeable as the ordinary income.
Given an alternative decision of writing the book herself was taken by the taxpayer
and then later selling it into the market the amount that would be obtained from selling the
books is held as royalties. In view of the decided ruling in “Hussy v Hobbs (1942)” the
autobiographies that was sold by the taxpayer was held as income and attracts tax liability
(Hepfer, Wilde and Wilson 2017). The money that were received from sale was a chargeable
income. The explanation denoted from the case of Hilary explains that the sum that would be
obtained from book selling is chargeable as the per the ordinary conceptions of “S-6-5 of the
ITAA 1997”.
Conclusively, the personal service income from writing the book and selling the
photographs as well as the manuscripts is a taxable income in accordance with the ordinary
concepts.