Assignment (1,500 words maximum)
Shirley is an actress. She has had various roles in Australian movies as well as guest appearances on many TV serials. During the current year, the following events occurred:
• Shirley was required to put on 10 kg to play the lead role in a new telemovie set in the 1950s. She was told she would only be awarded the role if she put on weight. She dined at restaurants several times a week and ate lots of fast food. She estimated that she spent around $500 on food that she would not ordinarily have eaten. She was paid $40,000 for her role. When she put on weight she had to buy new clothes to fit her at a cost of $1,500. At the end of filming the movie, she wanted to lose the weight and get back in shape. She hired a dietician at a cost of $800, a personal trainer at a cost of $2,500 and spent a week at a health farm at a cost of $1,200.
• Shirley was paid $1,500 by a women's magazine for an interview in which she spoke about her new telemovie as well as about her personal life.
• During the year, Shirley was fortunate enough to get a role in an upcoming Hollywood movie. Under the contract, she was to receive $15,000. She decided to pamper herself a little after her hectic filming schedule, so she flew first class to the US to film her part in the movie at a cost of $5,000 (an economy ticket would have cost $2,000). After the filming she spent a week visiting movie agents in Hollywood. She was hoping she might be able to pick up more movie roles in the US this way. She regarded this week as a "working holiday" and treated herself to a first class hotel at a cost of $4,000.
• A well known gossip magazine published a story on Shirley during the year that contained a number of untruth stories. Normally Shirley does not worry about these stories because she consider this to be part of being a movie star. However, on this occasion, she felt that some parts of the story were damaging to her reputation and could damage her chances of getting future roles as a movie star. She spent $10,000 in legal fees suing the magazine. The matter was ultimately settled out of court and Shirley received $25,000 in consideration of her giving up her rights to sue.
Required:
Discuss the income tax implications of the above receipts and payments by Shirley during the income year.