Part A

Describe why the payment to the taxpayer in FCT v Dixon (1952) 86 CLR 540 was assessable income but the payment in Scott v FCT (1966) 117 CLR 514 was not.

In your answer you should add the following:

i) A brief statement in your own words of the facts of the cases.

ii) Find the issues raised and the relevant legislation in the context of ITAA97.

iii) Search any cases and other sources of information relevant to the issues and legislation.

iv) Apply the law to the facts stating clearly why one taxpayer was assessable and the other was not.

Part B

Nigel is a professional percussionist and performs with a number of bands and orchestras. In order to practice, he set aside a special room in his house that is soundproof and contains a variety of electronic sound equipment. The room is used only for practice or performance related purposes. He pays council rates, interest on the house mortgage, maintenance, and repairs, electricity and telephone expenses in connection with the house. He believes he could be able to claim tax deductions for all these costs together with depreciation on the room and equipment.

Illustrate the tax position to Nigel. In you answer you should:

i) Illustrate the tax issues that are raised and the relevant sections of the legislation.

ii) Describe any cases and other sources of law or information that apply.

iii) Apply the law to the facts.

iv) Express a conclusion in regard to the issues identified and indicate any other information required.