MLC301 Principles of Income Tax Law - Question/Answer

Question 8 (4 points)

Discuss whether Emma has any assessable income as a result of entering into the below agreement (4 marks):
Green Pty Ltd (Green) are a chain of plant nurseries in Australia with hundreds of stores across the nation. They sell rare and valuable plants. Emma is an employee with Green and she has enjoyed working there for many years. She works at Green’s small warehouse in Collingwood. Part of her role with Green (as described in her contract) is attending national management meetings where she has input into marketing and sale strategies. This year, Emma enters into the following agreement with Green:
“Emma agrees that she will no longer be entitled to attend management meetings for Green. Emma agrees to the variation of her contract to reflect this change. In consideration, Green will pay Emma $20,000 for agreeing to this. Green further acknowledge the dedication that Emma has shown to Green over the past 5 years, and will pay her an Easter bonus of $5,000 in appreciation”. Emma signs the agreement and receives $25,000 into her bank account.