ITAA 1997: Ordinary Income According To Ordinary Concepts

6.3
According to s.6-5(1) ITAA 1997, ordinary income is ‘income according to ordinary concepts’, which is a component of the assessable income. Refer to s.6(1) ITAA 1936, earnings, salaries and fees of employee or people related to any services rendered are the examples of income from personal exertion.
Hilary is a mountain climber and she never wrote a story before, so the payment probably has insufficient nexus with her personal service because it is unlikely for her to sell stories as a career.
However, if the Daily Terror newspaper offered Hilary a $10,000 remuneration first, and then Hilary started writing her story and transferred the copyright to the Daily Terror, it would be similar to that Hilary received a job offer, completed the job and then got paid. The $10,000 can be considered to a reward for Hilary transferring her story’s copyright immediately to the Daily Terror. This situation is similar to the Holmes case that is the reward should be taxable under s.26(e) ITAA 1936, because the payment is ‘in recognition of the services performed’ . Thus, although Hilary is a non-employer of the Daily Terror, $10,000 can also be considered that it has sufficient nexus with her personal exertion, which should be a taxable ordinary income.
If Hilary wrote her story just because her personal fulfilment and then sold it later,
From the perspective of the motive of the giver, the reason for Frederick gave the watch to Albert was more likely due to Albert’s excellent service performance that is he successfully helped Frederick find a permanent job. And only within 10 days after Albert becoming the new case manager, which means that it was unlikely for Frederick and Albert developed a deep personal relationship . Thus, the watch could be an ordinary