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Mr Peter Petrelli lives in Armidale New South Wales (NSW). He is employed as a nurse at the local public hospital. Peter is aware that you are studying taxation law. He seeks your advice on the assessable income implications of the following for the financial year ended 30 June 2016: 1. Peter’s annual salary for the financial year from the hospital was $76,000; 2. At Christmas all the employees of the hospital received a hamper worth $100 from a local community organisation to thank them for their dedication in helping the local community; 3. Peter received $130 interest from his Eastpac bank account in Australia. He received $3,000 from his term deposit in a United Kingdom bank. Peter reminds you that Australia has a double tax agreement with the United Kingdom; 4. On 25 April 2016, ANZAC Day, Peter made $500 from playing Two-Up at the ex services club. Peter reminds you that Two-Up is legal to play in NSW on ANZAC day and other commemorative days; 5. Peter umpires games in the local basketball competition. Peter had to complete an umpiring course before he could begin. The competition organisers did not pay him a salary but they did give him season tickets for the Sydney Kings NBL team, valued at $250; 6. Peter and his family were contestants on the television game show Family Duel. They won $24,000 and agreed to split the winnings evenly between the four of them; 7. Most weekends Peter works on designing apps for smartphones. He doesn’t have any formal training in designing apps but he finds it an enjoyable means to relax. He hopes that one day one of his apps will make him rich. In the past he has not declared income or claimed expenses on the venture. Moreover, he does not keep records of the venture’s expenses because he believes the main cost is his time. He set up a separate bank account into which money is transferred every time someone downloads an app from the App Store. In the financial year he made $1,400 on the sale of apps; and 8. One of Peter’s colleagues, Dr Claire Bennett, did some work designing a logo for Peter’s app venture. Peter asked the hospital to pay $750 of his salary directly to Claire instead of him. Further discussion reveals that Peter is unclear on the characteristics of assessable income and the implications of carrying on a business. Peter confirms that he is an Australian resident. With reference to legal authority (eg legislation, case law, and if relevant, ATO guidance) advise Peter on the assessable income issues. Peter does NOT require advice on Goods and Services Tax or Fringe Benefits Tax. Do NOT calculate Peter’s income tax liability.
