Lecture Example Discussion

A sound answer would consider the following –

• What is the meaning of ‘income’ under s 6-5 ITAA97?
• In particular does a prize fall into the category of “income
according to ordinary concepts”?
• What is the nature of the prize – convertible to cash,

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periodic?? Prerequisites/characteristics??
• Is there a distinction between a windfall gain/gift and
income according to ordinary concepts? A windfall gain is
not income because it is not earned from personal
exertion and there may be an element of chance.
• Is the prize in relation to employment or services
rendered, is there a “nexus”? Did Margaret come first
because she is working as an accountant and has 1
practical experience? Might this affect the answer?
Lecture Example Solution
• Cash prize of $1000 - is given in a monetary form but not given
in relation to personal exertion or services – there is no nexus
to services provided. Also a one-off, lump sum payment.
Therefore not likely to be treated as income.
• Briefcase embossed with her name - can the briefcase be
converted into money? Unlikely to be treated as ordinary

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income, refer FCT v Cooke & Sherden (1980). (Note - ss 21 &
21A ITAA36 relate to valuations and business income - not
applicable). Assessable under s 15-2? Still no nexus to services
provided.
• Monthly payment of $100 - these are regular, expected and
relied upon - FCT v Dixon (1952). Begins to show more of the
characteristics of income. Prize is still not the result of
services rendered but income does not always have to be
attributable to employment or services rendered – consider 2
Centrelink payments.